An Orlando contract is $760,000. Cost incurred is $228,000 and estimated cost to complete is $342,000. Using percent complete, what revenue has been earned?
Correct Answer
D) $304,000
The job is 40% complete, so earned revenue is $304,000.
Why This Is the Correct Answer
The job is 40% complete, so earned revenue is $304,000.
Why the Other Options Are Wrong
Option A: $266,000
$266,000 is below the supported result for percent-complete earned revenue; it likely uses the wrong base, period, or account bucket.
Option B: $288,000
$288,000 is below the supported result for percent-complete earned revenue; it likely uses the wrong base, period, or account bucket.
Option C: $296,000
$296,000 is below the supported result for percent-complete earned revenue; it likely uses the wrong base, period, or account bucket.
Memory Technique
Complete and earned live in different drawers; Month-End Needs tells which opens.
Reference Hint
Open-book path: tab Builder's Guide to Accounting, 2001 to Section One, Accounting Methods, Percentage-of-Completion Method; Section Three, Recording Before the Event, Percentage of Completion Adjustments; use the job ledger figures in the stem and recompute the same accounting measure.
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