Kinne Construction was contracted by Sitzabee Inc. to build a building. Kinne Construction provided an estimate that the building would take 18 months, starting on July 1 of the first year.

The agreed upon contract price was $2,250,000. By December 31 of the first year, Kinne Construction finished approximately one-third of the construction on the building (as agreed upon by the A/E) and subsequently billed Sitzabee Inc. $800,000. Kinne Construction incurred $610,000 in job costs on this project. The G&A cost for the first year was $25,000.

By the end of the second year, Kinne Construction finished the rest of the building and gained acceptance from Sitzabee Inc. For the second year, he billed Sitzabee Inc. $1,450,000 while incurring $1,140,000 in job costs. His G&A cost was $36,000.

Using the Percentage of Completion Method:

What is the reported profit and net income for each year for this project?

What is the total reported profit and net income for the project?

How does the amount billed relate to the reported income in a given year?

Using the Completed-Contract Method:

What is the reported profit and net income for each year for this project?

How does the amount billed relate to the reported income in a given year?