(Gross Profit on Uncompleted Contract) On April 1, 2007, Brad Bridgewater Inc. entered into a cost-plus-fixed-fee contract to construct an electric generator for Tom Dolan Corporation. At the contract date, Bridgewater estimated that it would take 2 years to complete the project at a cost of $2,000,000.

The fixed fee stipulated in the contract is $450,000. Bridgewater appropriately accounts for this contract under the percentage-of-completion method. During 2007 Bridgewater incurred costs of $700,000 related to the project. The estimated cost at December 31, 2007, to complete the contract is $1,300,000. Dolan was billed $600,000 under the contract.

Instructions Prepare a schedule to compute the amount of gross profit to be recognized by Bridgewater under the contract for the year ended December 31, 2007. Show supporting computations in good form.