On April 1, 2017, Dougherty Inc. entered into a cost plus fixed fee non-cancellable contract to construct an electric generator for Altom Corporation. At the contract date, Dougherty estimated that it would take two years to complete the project at a cost of $2,000,000. The fixed fee stipulated in the con- tract was $450,000. Dougherty appropriately accounts for this contract under the percentage-of-completion method. During 2017, Dougherty incurred costs of $800,000 related to this project. The estimated cost at December 31, 2017, to complete the contract is $1,200,000. Altom was billed $600,000 under the contract. The billings are non-refundable.
Instructions
Prepare a schedule to calculate the amount of gross profit to be recognized by Dougherty under the contract for the year ended December 31, 2017. Show supporting calculations in good form.