Shanahan Construction Company has entered into a contract beginning January 1, 2022, 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 cost-recovery method, compute the estimated gross profit that would be recognized during each year of the construction period.

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2022 2023 2024 Costs to date $270,000 $450,000 $610,000 Estimated costs to complete 330,000 150,000 -0- Progress billings to date 270,000 550,000 900,000 Cash collected to date 240,000 500,000 900,000