Seattle Boatbuilders was recently awarded a \($14,000,000\) contract to construct a luxury liner for Cruiseliners Inc. Seattle estimates it will take 42 months to complete the contract.The company uses the cost-to-cost method to estimate profits.The following information details the actual and estimated costs for the years 2001-2004.

Instructions:
1. Compute the revenue, cost, and gross profit to be recognized for each of the years 2001-2004 under the percentage-of-completion method.
2. Give the journal entries for each of the years 2001-2004 to record the information from (1).

Year 2001 2002 2003 2004 Actual Cost- Current Year Estimated Cost to Complete $6,800,000 $6,500,000 3,300,000 3,900,000 2,400,000 1,900,000 1,700,000