Analysis of Percentage-of-Completion Financial Statements In 2010, Stein otter Construction Corp. began construction work under a 3-year contract. The contract price was $1,000,000. Stein otter uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of cost incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2010, follow.

(a) How much cash was collected in 2010 on this contract?

(b) What was the initial estimated total income before tax on this contract?

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2010 2011 2012 Costs to date $1,620,000 $3,850,000 $5,500,000 Estimated costs to complete Progress billings to date --0- 6,510,000 6,510,000 1,200,000 1,000,000 Cash collected to date 2,800,000