Bailey Builders Corporation accepted a three- year, $ 1,000,000 fixed- fee contract to renovate a parking deck. Bailey uses the percentage- of- completion method and the cost- to- cost method of measuring progress. Information related to the construction contract is presented below.

Prepare the journal entries required in each year to record the contract. Show all supporting computations.

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Contract price $1,000,000 2015 2016 2017 Actual construction costs incurred during the year 350,000 S525,000 S 50,000 Construction costs incurred in prior years Cumulative construction costs incurred to date Estimated costs to complete Estimated total costs 875,000 $350,000 S875,000 925,000 350,000 450,000 25,000 Progress billings made during the year Cash collections during the year $800,000 900,000 $925,000 $500,000 S300,000 $200,000 400,000 S350,000 $250,000