I HAVE TO UNDERSTAND THIS EXCECISE! I WILL RATE!!! PLEASE!

On July 1, 2020, Welton Inc. entered into a cost-plus fixed fee contract to construct a prototype robotic assembly line for New Car Corporation. At the contract date, Welton estimated that it would take 2 years to complete the project at a cost of $4,000,000. The fixed fee stipulated in the contract is $750,000. Welton appropriately accounts for this contract under the percentage-of-completion method.

During 2020 Welton incurred costs of $1,600,000 related to the project. The estimated cost at December 31, 2020, to complete the contract is $2,400,000. New Car was billed $1,200,000 under the contract.

Instructions

Prepare a schedule to compute the amount of gross profit to be recognized by Welton under the contract for the year ended December 31, 2020. Show supporting computations in good form.