In 2021, Oilers Construction Inc. (OCI) was awarded a contractto construct an interchange at the junction of two major freewaysin a Canadian city at a total contract price of $10,000,000. Theestimated total costs to complete the project were $7,500,000, andit is expected to take three years.

Instructions

Using the percentage-of-completion method:

1. Prepare the journal entries to record the capitalization and recognition of the actual expenses for the construction costs of$3,500,000 in 2021.
2. Prepare the journal entry to record progress billings of$3,000,000 for the first year.
3. Prepare the journal entry to record collection on the progress billings of $2,500,000 during the first year.
4. Prepare the journal entry to recognize the revenue for the first year. Show all your calculations and round your answers to the nearest dollar
5. With the proper title and classifications, prepare a partial statement of financial position for OCI as of December 31, 2021, showing Accounts Receivable and Construction Contract Asset(Liability) for the construction contract mentioned above. Please show all general ledger listing to support your statement.
6. With the proper title, prepare a partial statement of incomefor OCI showing the revenue, expense and gross margin of theabove-mentioned construction contract.

Please answer all parts.