ANSWER QUESTION ONLY IF YOU CAN SHOW CALCUALTIONS. THANKS

18-12B (Recognition of Profit on Long-Term Contracts) During 2014 AFCO started a construction job

with a contract price of $2,500,000. The job was completed in 2016. The following information is available.

2014 2015 2016

Costs incurred to date $ 600,000 $1,435,000 $2,100,000

Estimated costs to complete 1,400,000 615,000 0

Billings to date 100,000 500,000 2,500,000

Collections to date 100,000 300,000 2,000,000

Instructions

(a) Compute the amount of gross profit to be recognized each year assuming the percentage-ofcompletion

method is used. PLEASE SHOW CALCULATIONS

(b) Prepare all necessary journal entries for 2015. PLESE SHOW CALCULATIONS

(c) Compute the amount of gross profit to be recognized each year assuming the completed-contract

method is used. PLEASE SHOW CALCULATIONS