In 2013, McArthur-Douglas contracted to build an airplane for $12,000,000.Data relating to the contract are as follows:

($ in thousands)

20132014

Costs incurred during the year..........................$2,000$6,000

Estimated costs to complete as of year-end......6,000-

Billings during the year...................................6,0006,000

Cash collections during the year.......................5,0007,000

Required:

Determine the gross profit that McArthur-Douglas should recognize in both 2013 and 2014 using thepercentage-of-completion method.Show calculations.