On July 1, 2020, Torvill Construction Company, Inc. contracted to build an office building for Gumbel Corporation for a total contract price for $1,900,000. On July 1, Torvill estimated that it would take between two and three years to complete the building. On December 31, 2022, the building was deemed substantially completed. Following are accumulated contract costs incurred, estimated costs to complete the contract, accumulated billings, and cash collections for 2020, 2021, and 2022.

2020 2021 2022

Contract costs to date $ 300,000 $1,200,000 $2,100,000

Estimated costs to complete 1,200,000 800,000 -0-

Billings to Fabrik to date 300,000 1,100,000 1,850,000

Cash collected to date 250,000 1,000,000 1,600,000

A. Using the percentage -of-completion method, prepare the first three journal entries for 2021 and 2022.

B. Using the percentage-of-completion method, prepare the journal entry to recognize revenue and gross profit/loss for all three years.

C. Using the percentage-of-completion method, prepare the journal entry Torvill would make at the end of 2022 to close out the contract.

D. Using the complete contract method, show how much profit or loss from this contract would be reported for the years 2020, 2021, and 2022.