There is a condominium building being built for a revenue contract price of $60 million. This is estimated to be a three year project with an estimated cost of $48 million. The company uses the percentage of completion method of revenue recognition, using the cost-to-cost method of estimating the percentage of completion. The following is the best available information for the end of each year:

Year 1

Year 2

Year 3

Costs incurred each year

$13,000,000

$27,000,000

$14,000,000

Estimated costs to complete

$37,000,000

$18,000,000

$0

Billings on construction in progress

$15,000,000

$25,000,000

$20,000,000

Cash collected

$8,000,000

$20,000,000

$32,000,000

Required:

a. Compute the amount of gross profit to be recognized in Year 1, Year 2, and Year 3. Show computations in a tabular form in a spreadsheet. You must show the full calculations;

b. Prepare all of the journal entries required in Year 2;

c. Prepare the journal entry required in Year 3 to close the accounts related to the project;