Use the Following Information for Problems -Under the Percentage-Of-Completion Method, How Much Profit Should Carbon Recognize

Multiple Choice

Use the following information for problems.
Carbon Corporation had a $2,000,000 contract to build a small hospital with total costs estimated at $1,600,000. It received the following payments and incurred the following expenses over the three-year contract period:
$$\begin{array} { c c c } \text { Year } & \underline { \text { Payments } } & \text { Expenses } \\1 & \$ 400,000 & \$ 300,000 \\2 & \$ 1,200,000 & \$ 900,000 \\3& \$ 400,000 & \$ 550,000\end{array}$$
-Under the percentage-of-completion method, how much profit should Carbon recognize in year 2?

A) $400,000
B) $300,000
C) $225,000
D) $150,000