Dolphin Construction Company, Inc., entered into a firm fixed- price contract on October 1, 2018,

to construct a three-story medical building. At that time, Dolphin esti- mated that it would take 2

to 3 years to complete the project. The total contract price for construction of the

building is $8,000,000. Dolphin appropriately accounts for this contract under the completed- contract method in its financial statements and for income tax reporting. The building was

deemed substantially completed on December 31, 2020. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and

accumulated billings to under this contract are shown below.

Percentage of Contract costs Estimated costs to Billings

Completion incurred complete the contract

At December 31, 2018 20% $1,400,000 $6,600,000 $1,000,000

At December 31, 2019 60% $4,920,000 $3,280,000 $4,500,000

At December 31, 2020 100% $8,100,000 0 $7,800,000

Instructions

(a) Prepare schedules to compute the amount to be shown as Cost of uncompleted contract in excess of related billings or Billings on uncompleted contract in excess of related costs at December 31, 2018, 2019, and 2020. (Ignore income taxes.) Show supporting computations in good form with explanations