During 2012 AFCO started a construction job with a contract price of $2,500,000. The job was completed in 2014. The following information is available.

	2012	2013	2014
Costs incurred to date	$ 700,000	$1,435,000	$2,100,000
Estimated costs to complete	1,400,000	715,000	0
Billings to date	150,000	500,000	2,500,000
Collections during the year	100,000	300,000	2,000,000

Instructions:

(a) Compute the amount of gross profit to be recognized each year assuming the percentage-of completion method is used (20 points).

(b) Prepare all necessary journal entries for 2013 (16 points).

(c) Compute the amount of gross profit to be recognized each year assuming the completed-contract method is used (4 point).