Shanahan Construction Company has entered into a contract beginning January 1, 2017, to build a parking complex. It has been estimated that the complex will cost $600,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $900,000. The following data pertain to the construction period.

Instructions
(a) Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period.
(b) Using the completed-contract method, compute the estimated gross profit that would be recognized during each year of the construction period.

Transcribed Image Text:

2017 Costs to date Estimated costs to complete Progress billings to date Cash collected to date 270,000 330,000 270,000 240,000 2018 $450,000 150,000 550,000 500,000 2019 S610,000 900,000 900,000