Question 2 (36 marks)_ Rasher Construction Limited (RCL) entered into a contract to construct a building for $1,025,000. The contract provided for progress payments. RCL's accounting year ends December 31. Work began under the contract on August 1, 2014, and was completed on October 31, 2016. Construction activities are summarized below: 2014 2015 2016 Construction costs incurred during the year 220,000 460,000 240,000 Estimated remaining costs to complete 620,000 210,000 0 Progress Billings to date 250,000 600,000 1,025,000 Cash Collections during the year 200,000 370,000 455,000 REQUIRED 1. Record RCL's journal entries assuming that the percentage-of-completion method is used. Assume that the percentage of completion is measured by the ratio of costs incurred to date divided by total estimated construction costs. Show all calculations for full marks and use 4 decimal places to calculate revenue (14 marks) 2. Complete the following table for RCL using the percentage-of-completion method: (7 marks) 2014 2015 2016 Accounts Receivable CIP Inventory Billings on Contract Cost in excess of billings Construction Revenue Costs of Construction Gross Profit 3. How could management of RCL manipulate the accounting for this construction contract in order to achieve its motivation of maximizing net income (e.g. to earn a bigger bonus) in the earlier years? (1 mark) 2