Competed-contract

Rainbow Builders, Inc., is a reputed construction company. During 2018, Rainbow Company started a construction job with a contract price of $1,600,000 to build a commercial building. The job was completed in 2020 . The following information is available. Required: 1.Compute the amount of gross profit to be recognized each year, assuming the competedcontract method is used. \begin{tabular}{|l|rr|rr|r|r|} \hline \multicolumn{5}{|c|}{ amount of gross profit by percentage-of-completion method } \\ \hline & \multicolumn{2}{|c|}{2018} & \multicolumn{2}{|c|}{2019} & \multicolumn{1}{|c|}{2020} \\ \hline Contract price & $ & 1,600,000.00 & $ & 1,600,000.00 & $ & 1,600,000.00 \\ \hline Actual cost incurred during year & $ & 400,000.00 & $ & 825,000.00 & $ & 1,070,000.00 \\ \hline Actual prior year costs & $ & & $ & 400,000.00 & $ & 825,000.00 \\ \hline Actual costs up to date & $ & 400,000.00 & $ & 1,225,000.00 & $ & 1,895,000.00 \\ \hline Estimated costs up to completion & $ & 600,000.00 & $ & 275,000.00 & $ & \\ \hline Total estimated costs & $ & 1,000,000.00 & $ & 1,500,000.00 & $ & 1,895,000.00 \\ \hline% of completion & & 40% & & 82% & 100% \\ \hline Revenue Recognized & $ & 640,000.00 & $ & 1,306,666.67 & $ & 1,600,000.00 \\ \hline Less Revenue Recognized in previous year & $ & & $ & 640,000.00 & $ & 1,306,666.67 \\ \hline Revenue Recognized for current year & $ & 640,000.00 & $ & 666,666.67 & $ & 293,333.33 \\ \hline Gross profit Recognized for current year & $ & 240,000.00 & $ & (158,333.33) & $ & (776,666.67) \\ \hline \end{tabular}