Reference no: EM132951233

Question - Use the following information for the next questions - Reality Inc works on a contract in March 2016 to construct a commercial building. During 2016, Reality uses the cost to cost method. At December 31, 2016, the balance of certain accounts were: Excess of CIP over billings - P 140,000 due from customer; and PB P 560,000 which is 1/5 of the contract price. At December 31, 2016, the estimated future costs to complete the project total P 1,350,000. Of the amount billed, 70% were paid in 2016 subject to retention provision of 15%, payable with the final bill after the acceptance of entire completed project. A mobilization fee of 5% of the contract price (deductible from the final bill) is payable in 10 days after the contract signing.

1. What is the cost incurred to date in 2016?

a. 1,800,000 c. 450,000

b. 1,350,000 d. 700,000

2. What portion of the contract price is recognized as income in 2016?

a. 700,000 c. 191,200

b. 250,000 d. 526,800

3. What is the total collection in 2016?

a. 333,200 c. 532,000

b. 392,000 d. 473,200