need 16 and 17 answered

Three years ago, the Smith Company entered into a contract to construct a building for a client. Smith uses the percentage-of-completion method (i.e. they recognize revenue over time). The details of the contract are summarized in the table below: $ Billings during year Cash collections during year Contract price Cost incurred in the year) Cost incurred (running balance) Estimated cost to complete Year 1 4,000 $ 500 $ $12,000 $1,000 $1,000 $3,000 Year 2 5,500 $ 3,500 $ $12,000 $6,000 $7,000 $3,000 Year 3 2,500 8,000 $12,000 $3,000 $10,000 QUESTION: In YEAR 1, Revenue is credited for... 3,000 2,000 4,000 500 3,500 No revenue from the contract is credited in YEAR 1 None of the above is correct, all choices are far from the correct answer Question 16 (4 points) (continued from the previous problem) As a result of the journal entries recorded in YEAR 2, pre-tax net income... Increases by $5,500 Increases by $9,500 Increases by $5,400 Increases by $8,400 Decreases by $100 Decreases by $600 Decreases by $1,100 Decreases by $3,000 Does not change Question 17 (4 points) (continued from the previous problem) Suppose that a surge in costs in the Year 2 makes the Smith Company realize that they are going to make a loss on this contract. Which of the following is true? They will have to recognize a portion of the loss in Year 2 and the remaining portion in Year 3, depending on the percentage of completion. They will have to bill the customer for a lower amount They will have to recognize the entire loss in Year 2, regardless of the percentage of completion They will have to switch to the "Completed Contract Method" None of the answers is correct