Shanahan Construction Company has entered into a contract beginning January 1, 2015, to build a parking complex. It has been estimated that the complex will cost \($600\),000 and will take 3 years to construct. The complex will be billed to the purchasing company at \($900\),000. The following data pertain to the construction period.

Instructions

(a) Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period.

(b) Using the cost-recovery method, compute the estimated gross profit that would be recognized during each year of the construction period.

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2015 Costs to date $270,000 Estimated costs to complete 330,000 2016 $450,000 150,000 2017 $610,000 -0- Progress billings to date 270,000 550,000 900,000 Cash collected to date 240,000 500,000 900,000