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.

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