Bigelow Contractors signed a contract to construct a storage facility for RGN Manufacturing, Inc. The fixed-fee contract specifies that the facility is to be completed in three years. Bigelow uses the percentage-of-completion method (cost-to-cost approach) to account for its construction transactions. Information related to this contract is summarized in the following table.

Required

a. Compute the percentage completed for each year.

b. Compute the gross profit and revenue to be recognized each year of the contract.

c. Prepare the journal entries required for each year of the contract.

d. Prepare the t-accounts for construction in progress, billings on construction in progress, and accounts receivable.

e. Determine the net asset (liability) for each year of the contract on December 31.

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$2,000 000 2018 Contract prce 2019 2020 Actual construction costs incurred during the year Construct on costs incurred in prior years Cumulat ve construct on costs incurred to date Est mated costs to comptete Est mated total costs Progress b llings made during the year Cash collections dur ng the year $ 900,000 $ 300 000 $ 600,000 900.000 1,200,000 1,200 000 1.800,000 400 000 1,600 000 1,800,000 600,000 900,000 600,000 1,500 000 700 000 700,000 400,000 800 000 800,000