Optimist Ltd. is constricting a residential highrise in downtown Vancouver for a contract price of 512,000,000. Costs for this contract were initially estimated to be $9,000,000. The company uses the percentage-of-completion method of revenue recognition, using the cost-to-cost method of estimating the percentage complete. The following information is available:

Required:
a. Compute the amount of gross profit to be recognized in each year. Show computations in good form.
b. Compute the amount of revenue to be recognized in Year 2.
c. Prepare all the journal entries required in Year 2.
d. Prepare the journal entry required in Year 3 to acknowledge completion and acceptance of the project.

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(in S thousands) Costs incurred each year Additional costs to complete estimated at year end Billings on constiction in progress Cash collected Year I Year 2Year 3 $3,500 6, $2,000 6,500 3,000 5,000 4,00 3,000 4,700 4,200 3,100