*E18-21B (L05,6) (Recognition of Profit on Long-Term Contracts) During 2017 AFCO started a construction job with a contract price of $2,500,000. The job was completed in 2019. The following information is available

2017 ; 2018 ; 2019

Costs incurred to date: 600,000 ; 1,435,000 ; 2,100,000

Estimated costs to complete: 1,400,000 ; 615,00 ; 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-of completion method is used.

(b) Prepare all necessary journal entries for 2018.

(c) Compute the amount of gross profit to be recognized each year, assuming the completed-contract method is used.