Gorman Construction Co. began operations in 2013. Construction activity for 2013 is shown below. Gorman uses the completed contract method.
| Billings | Collections | Contract Costs | Estimated | |||||||
| Contract | Through | Through | Incurred Through | Additional Costs | ||||||
| Contract | Price | 12/31/13 | 12/31/13 | 12/31/13 | to Complete | |||||
| 1 | $3,200,000 | $3,150,000 | $2,600,000 | $2,150,000 | %u2014 | |||||
| 2 | 3,600,000 | 1,500,000 | 1,000,000 | 820,000 | $1,880,000 | |||||
| 3 | 3,300,000 | 1,900,000 | 1,800,000 | 2,250,000 | 1,200,000 |
Which of the following should be shown on the income statement for 2013 related to Contract 1?
|
Gross profit, $1,000,000 |
|
Gross profit, $1,050,000 |
|
Gross profit, $600,000 |
|
Gross profit, $450,000 |