Pensacola Building Co. signed a contract to build a road over a period of three years for a price of $600,000. Information relating

to the performance of the contract in the first two years is summarized below:

2016 2017

Construction costs incurred during the year $110,000 $226,000

Estimated costs to complete 330,000 224,000

Billings during the year (all collected in cash) 100,000 290,000

a. Prepare the journal entries for 2016 and 2017, assuming that the company uses the percentage of completion method.

b. How would the journal entries change if the company used the completed contract method?