In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2020. Information related to the contract is as follows:

2018 2019 2020

Cost incurred during the year $2,523,000$3,177,000$1,980,000

Estimated costs to complete

as of year-end 6,177,0001,800,000 0

Billings during the year 2,070,0003,630,000 4,300,000

Cash collections during the year1,835,000 3,400,000 4,765,000

Westgate recognizes revenue over time according to percentage of completion.

Required:

1.Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years.

So, to calculate the amount of revenue recognized, I took 2,523,000 and divided it by 8,700,000 (costs plus estimate to complete) and got 29%. I multiplied 29% by 10,000,000 and got 2,900,000 and that answer is right. But when I add 2,523,000+3,177,000 (cumulative costs) and then divide that by 7,500,000 (cumulative costs plus estimated costs to complete), I get 76%. When I multiply that by 10,000,000 and get 7,600,000, that answer is not right. What am I doing wrong?