Koolman Construction Company began work on a contract in 2019. The contract price is $3,000,000, and the company determined that its performance obligation was satisfied over time. Other information relating to the contract is as follows:

Required:
1. Compute the gross profit or loss recognized in 2019 and 2020.
2. Prepare the appropriate sections of the income statement and ending balance sheet for each year.

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2019 2020 Costs incurred during the year Estimated costs to complete, December 31 Billings during the year Collections during the year $ 700,000 $ 600,000 1,400,000 500,000 400,000 1,200,000 850,000 800,000