Reference no: EM132779902

Salamagi Co. estimated a ?5,000,000 gross profit from the project. The percentage of completion method will be used. In 20x1, Salamagi billed the customer for 50% completion of the project. The customer accepted all the billings, except one for 10% which was accepted on January of the following year. All the accepted billings were collected during the year except an 8% billing which was due January of the following year.

Problem 1: What is the total amount of collections from the billings in 20x1?

a. 5,760,000
b. 6,760,000
c. 7,400,000
d. 6,400,000

Problem 2: What is the amount of profit recognized from the contract in 20x1?

a. 2,500,000
b. 2,650,000
c. 2,900,000
d. 2,720,000