In 2022, Steinrotter Construction began construction work under a 3-year contract. The contract price was €1,000,000. Steinrotter uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of cost incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2022, are shown below.

Instructions

a. How much cash was collected in 2022 on this contract?

b. What was the initial estimated total income before tax on this contract?

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Statement of Financial Position Accounts receivable €18,000 Construction in process €65,000 Less: Billings 61,500 Costs and recognized profit in excess of billings 3,500 Income Statement Income (before tax) on the contract recognized in 2022 €19,500