In 2012, Gurney Construction Company agreed to construct an apartment building at a price of $1,200,000. The information relating to the costs and billings for this contract is shown below.

Instructions(a) Assuming that the percentage-of-completion method is used, (1) Compute the amount of gross profit to be recognized in 2012 and 2013, and (2) Prepare journal entries for 2013.(b) For 2013, show how the details related to this construction contract would be disclosed on the balance sheet and on the incomestatement.

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2013 2012 2014 Costs incurred to date Estimated costs yet to be incurred $ 785,000 $280,000 $600,000 -0- 1,200,000 500,000 150,000 Collection of billings to date 320,000 940,000