Use the Following Information for the Following Questions:
in 2020 $\ldots \ldots \ldots \ldots \ldots \ldots \ldots\$150,000$

Multiple Choice

Use the following information for the following questions:
In 2020, Cement Inc. began a three year construction contract for $ 3,500,000. Cement uses the percentage-of-completion method. The income to be recognized each year is based on the proportion of costs incurred to total estimated costs for completing the contract. The financial statement presentation relating to this contract for calendar 2020 follow:
Statement of Financial Position
Current assets:
Accounts receivable $\ldots \ldots \ldots \ldots \ldots \ldots \ldots\$150,000$
Contract asset/liability $\ldots \ldots \ldots \ldots \ldots \ldots \ldots105,000$
Contract costs $\$ 425,000$ less Billings of $\$ 320,000$ )

Income Statement
Income (before tax) on the contract recognized in $2020 \ldots \ldots \ldots . . \quad \$ 105,000$
-What was the initial estimated gross profit on this contract?

A) $ 381,430
B) $ 405,231
C) $ 650,204
D) $ 864,703