E18-4 (Recognition of Profit on Long-Term Contracts) During 2007 Pierson Company started a construction job with a contract price of $1,500,000. The job was completed in 2009. The following information is available. 2007 2008 2009 Costs incurred to date $400,000 $935,000 $1,070,000 Estimated costs to complete 600,000 165,000 0 Billings to date 300,000 900,000 1,500,000 Collections to date 270,000 810,000 1,425,000 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 2008.