Nautilus Resources is investing in a new heavy oil upgrader in northern Alberta. Nautilus has hired Rite Build Contractors to construct the facilities. The contract price is $3,600 million to be completed over four years. The following information pertains to this construction contract.

Required:
a. Compute the amount of revenue and expense to be recognized in the accounts of Rite Build Contractors in each of the four years. Show computations in tabular format in a spreadsheet.
b. Prepare all the journal entries required in Year 1.
c. Prepare the journal entry required in Year 4 to close the accounts related to the project.
d. If Rite build were to underestimate the cost to complete to be S940 million instead of $1,140 million in Year 3, how much gross profit or loss would be recognized in each year? How much more or less gross profit or loss would be reported in that year? How much more or less gross profit would be reported in Year 4, and in total for all four years?

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(in S millions) Cumulative costs incurred to date Estimated additional costs to complete Billings on construction in progress Cash collected in the year YearYear 2 Year 3 Year 4 480 1,250 2,660 3,750 2,520 1.875 1,140 5000 1,000 ,200 860 1,030 1,260 450