1. Howell Co. had the following first-year amounts for a $7,000,000 construction contract:

Actual costs $2,000,000

Estimated costs to complete: $6,000,000

Progress billings: $1,800,000

Cash collected: $1,500,000

What amount should Howard recognize as gross profit (loss) using the percentage-of-completion method?

a. ($1,000,000)

b. ($200,000)

c. $800,000

d. $1,750,000