Camey Construction Enters into a Long-Term Fixed Price Contract to Build

Multiple Choice

Camey Construction enters into a long-term fixed price contract to build an office building for $8,000,000. In the first year of the contract Camey incurs $1,000,000 of cost and the engineers determined that the remaining costs to complete are $2,200,000. Camey billed $1,700,000 and collected $1,400,000 in Year 1. Refer to Camey Construction. How much gross profit should Camey recognize in Year 1 assuming the use of the percentage-of-completion method? (Do not round intermediary calculations, and round your final answer to the nearest whole dollar.)

A) $1,500,000
B) $531,250
C) $7,000,000
D) $8,000,000