Question: Deen Construction began a construction project in 2018. The contract price was $1,250,000, and the estimated costs were $1,000,000. Data for each year of the

Deen Construction began a construction project in 2018. The contract price was $1,250,000, and the estimated costs were $1,000,000. Data for each year of the contract are as follows:

	2018	2019	2020
Costs incurred during the year	$250,000	$600,000	$190,000
Partial billings	$375,000	$500,000	$375,000
Estimated costs to complete	$750,000	$212,500	$0
Collections	$187,500	$469,000	$593,500

Instructions:

1. Assuming Deen the percentage of completion method:

(a) Prepare a schedule that computes the gross profit for 2018 - 2020

(b) Determine the net amount for construction in progress inventory should be reported on the 2018 balance sheet.

(c) Prepare all the necessary journal entries for 2019

2. Compute the amount of gross profit to be recognized each year, assuming the completed contract method is used.

You must show supporting computations to receive credit.

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