Question

JRE2 Inc. entered into a contract to install a pipeline for a fixed price of $2,320,000....

JRE2 Inc. entered into a contract to install a pipeline for a fixed price of $2,320,000. JRE2 recognizes revenue upon contract completion.

Cost incurred Estimated Cost to Complete
2020 $ 266,000 $ 1,630,000
2021 1,680,000 588,000
2022 530,000 0


In 2022, JRE2 would report gross profit (loss) of:

Multiple Choice

  • $(156,000).

  • $102,000.

  • $58,000.

  • $19,333.

Business   Accounting   
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Answer #1
Correct Option A : $(156000)
In 2022,
Contract Price          2,320,000
Less: Cost incurred
2020           (266,000)
2021        (1,680,000)
2011           (530,000)
Gross Margin           (156,000)
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