Question

(Percent-of-completion and completed-contract method) On February 1 2010, Marsh Contractors agreed to construct a building at a contract price of $6,000,000. Marsh estimated total construction cost would be $4,000,000 and the project would be completed in 2012. Information relating to the costs and billings for this contract is as follows: Total cost incurred to date; 2010- $1,500,000; 2011- $2,640,000; 2012- $4,600,000; Estimated cost to complete; 2010- $2,500,000; 2011- $1,760,000; 2112- 0; Customer billings to date; 2010- $2,200,000; 2011- $4,000,000; 2012- $5,600,000; Collections to date; 2010- $2,000,000; 2011- $3,500,000; 2012- $5,500,000. Show the gross profit that should be recorded for 2010, 2011, and 2012 using both the percent-of- completion and completed-contract methods.