EXERCISE 18-6 (10-12 minutes)

BRAD BRIDGEWATER, INC.           Computation of Gross Profit to Be Recognized on Uncompleted Contract Year Ended December 31, 2004 _____________________________________________________________ Total contract price         Estimated contract cost at completion                                     $2,000,000              ($700,000 + $1,300,000)         Fixed fee                                                                                               450,000                 Total                                                                                            2,450,000         Total estimated cost                                                                        2,000,000         Gross profit                                                                                          450,000         Percentage of completion ($700,000 ÷ $2,000,000)                            35%         Gross profit to be recognized ($450,000 X 35%)                     $   157,500 :.0001p