E18-35 (LO5) Gross Profit on Uncompleted Contract

On April 1, 2017, Dougherty Inc. entered into a cost-plus-fixed-fee contract to construct an electric generator for Altom Corporation. At the contract date, Dougherty estimated that it would take 2 years to complete the project. Additional information on the project follows:

Estimated cost to complete the project at the contract date						$2,000,000
Fixed fee stipulated in the contract						450,000
Cost incurred during 2017 on the project						800,000
Estimated cost at December 31, 2017, to complete the project						1,200,000
Amount billed to Altom under the contract						600,000

Dougherty appropriately accounts for this contract under the percentage-of-completion method.

Instructions:
Prepare a schedule to compute the amount of gross profit to be recognized by Dougherty under the contract for the year ended December 31, 2017.