Ivanhoe Construction Company uses the percentage-of-completion method of accounting. In 2021, Ivanhoe began work on a contract it had received which provided for a contract price of $27500000. Other details follow in 2021:

Costs incurred during the year $14000000

Estimated costs to complete as of December 31 8000000

Billings during the year 11500000

Collections during the year 8500000

What should be the gross profit recognized in 2021?

$13500000

$3500000

$1166667

$5500000