In 2014, Keefer Construction began construction work under a three-year contract. The contract price was $500,000. Keefer Construction uses the percentage-of-completion method for financial reporting purposes and applies it by basing recognized income each year on the proportion of cost incurred to date to total estimated costs for the contract. Trial balance information related to this contract at December 31, 2014, was as follows:

Required:
1. What was the initial estimated total profit before tax on this contract?
2. How much cash was collected on this contract in2014?

DR CR $ 7,500 125,000 Accounts receivable Inventory: Construction in progress Billings on construction contract Construction revenue Construction expenses $110,000 125,000 100,000