McCombs Contractors received a contract to construct a mental health facility for $2,500,000. Construction was begun in 2020 and completed in 2021. Cost and other data are presented below:

2020 2021

Costs incurred during the year $1,500,000 $1,300,000

Estimated costs to complete 1,200,000 0

Billings during the year 1,200,000 1,300,000

Cash collections during the year 1,000,000 1,500,000

Part 1: Assume that McCombs recognizes revenue on this contract over time according to percentage of completion. Required: Compute the amount of gross profit recognized during 2020 and 2021.

Part 2: Assume that McCombs recognizes revenue on this contract over time according to percentage of completion. Required: Prepare all journal entries to record costs, billings, collections, and profit (loss) recognition. Round your answers to the nearest whole dollar.

Part 3: Assume that McCombs recognizes revenue upon project completion. Required: Compute the amount of gross profit recognized by McCombs during 2020 and 2021.