1. Glennys Gems Inc. began operations January 1, 2020. (PLEASE SHOW ALL WORK)

During the year, Noelles Construction entered into a contract with Glennys Gems Inc. to construct a retail showcase facility. At that time, Noelle estimated that it would take 2 years to complete the facility, at a total cost of $7,500,000.

The total contract price for construction of the facility is $9,000,000.

During the year, Noelle incurred $3,040,000 in construction costs related to the construction project.

The estimated cost to complete the contract is $4,560,000.

Glennys Gems Inc. was billed and paid 20% of the contract price.

Instructions:

Prepare schedules to compute the amount of gross profit to be recognized for the year ended December 31, 2020, and the amount to be shown as costs and recognized profit in excess of billings or billings in excess of costs and recognized profit at December 31, 2020, under each of the following methods.

(a) Completed-contract method. (b) Percentage-of-completion method