Tullis Construction enters into a long-term fixed price contract to build an office tower for $10,000,000. In the first year of the contract Tullis incurs $3,000,000 of cost and the engineers determined that the remaining costs to complete are $5,000,000. Tullis billed $4,000,000 in year 1 and collected $3,500,000 by the end of the end of the year.

How mch gross profit should Tullis recognize in Year 1 assuming the use of the percentage-of completion method? A. B. 2,00o,0C0 C T5S0,CCO D. 2,50o,0to