ummary data for Mobic Inc. Job 1227, which was completed in 2021, are presented below: Bid price $ 450,000 Contract cost: 2020 (180,000 ) 2021 (195,000 ) Gross profit: 75,000 Estimated cost to complete: 12/31/2020 $ 200,000 12/31/2021 0 Assuming Mobic recognizes revenue upon project completion, what would gross profit have been in 2020 and 2021 (rounded to the nearest thousand)

2020 = $0; 2021 = $75,000

Explanation:

Under completed contract method, all revenues and expenses are recognized upon project completion. Since Mobic Inc. recognizes revenue upon project completion, gross profit in 2020 will be $0 as there are no revenues and expenses recognized in 2020.

Since the contact is completed in 2021, the entire revenues and expenses will be recognized in 2021

Contract price = $450,000

Contract costs = $180,000 + $195,000 = $375,000

Gross profit = $450,000 - $375,000  

Gross profit = $75,000

So, the entire gross profit of $75,000 will be recognized in 2021.

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