Curtis Co. entered into a long-term contract in 2020. The contract price was $2,250,000. The following data pertain to the first two years that the contract was in process.

2020 2021

Costs incurred to date $ 570,000 $1,557,500

Estimated costs to complete as of 12/31 1,330,000 667,500

Billings to date 650,000 1,250,000

Cash collections to date 600,000 1,150,000

1. Using the percentage-of-completion method:

A. Compute gross profit to be reported in each year

B. Prepare the necessary journal entries with respect to this contract for the year 2020 only.

C. Show how the inventory and billings accounts related to this contract would be reported on Curtiss balance sheet as of December 31, 2020.

2. Show how the inventory and billings accounts related to this contract would be reported on Curtiss balance sheet as of December 31, 2020, if Curtis used the completed-contract method of accounting for this contract