King Construction Company began work on a contract in 2013. The contract price is $4,000,000, and the company uses the percentage-of-completion method. Other information relating to the contract is as follows:

2013

Costs incurred during the year..................... $ 800,000

Estimated costs to complete, December 31...... 2,400,000

Billings during the year............................. 600,000

Collections during the year......................... 400,000

Required:

1. How much gross profit or loss does King recognize in 2013?

2. Prepare the appropriate sections of the 2013 income statement and ending balance sheet.