(Recognition of Profit and Balance Sheet Amounts for Long-Term Contracts) Andre Agassi Construction Company began operations January 1, 2007. During the year, Andre Agassi Construction entered into a contract with Lindsey Davenport Corp. to construct a manufacturing facility. At that time, Agassi estimated that it would take 5 years to complete the facility at a total cost of $4,500,000. The total contract price for construction of the facility is $6,300,000. During the year, Agassi incurred $1,185,800 in construction costs related to the construction project. The estimated cost to complete the contract is

$4,204,200. Lindsey Davenport Corp. was billed and paid 30% of the contract price.

Instructions Prepare schedules to compute the amount of gross profit to be recognized for the year ended December 31, 2007, and the amount to be shown as “costs and recognized profit on uncompleted contract in excess of related billings” or “billings on uncompleted contract in excess of related costs and recognized profit”

at December 31, 2007, under each of the following methods.

(a) Completed-contract method.

(b} Percentage-of-completion method.

Show supporting computations in good form.