Dancer Construction Company has entered into a contract beginning January 1, 2020, to build ampi-theatre. It has been estimated that the ampi-theatre will cost $2,500,000 and will take 3 years to construct.

The ampi-theatre will be billed to the purchasing company at $3,000,000.

The following data pertain to the construction period:

2020 2021 2022

Costs to date $800,000 $2,000,000 $2,580,000

Estimated costs to complete 1,700,000 500,000 -0-

Progress billings to date 600,000 1,750,000 3,000,000

Cash collected to date 420,000 1,600,000 3,000,000

Instructions:

1. Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period.

(b) Using the completed-contract method, compute the estimated gross profit that would be recognized during each year of the construction period.