Recognition of Profit on Long-Term Contracts During 2010 Nilsen Company started a construction job with a contract price of $1,600,000. The job was completed in 2012. The following information is available.

(a) Compute the amount of gross profit to be recognized each year assuming the percentage-of completion method is used.
(b) Prepare all necessary journal entries for 2011.
(c) Compute the amount of gross profit to be recognized each year assuming the completed-contract method is used.

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2011 2012 2010 Costs incurred to date Estimated costs to complete Billings to date Collections to date $400,000 $825,000 $1,070,000 -0- 1,600,000 1,425,000 300,000 270,000 900,000 810,000