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Exercise $18-33($Algorithmic$)($LO$.$ S$)$

Jebali Corporation, a calendar year taxpayer utilizing the completed contract method of accounting, constructed a building for Samson, Inc., under a long$-$term contract. The gross contract price was $$2,951,000.$ Jebali finished construction in $2024$ at a cost of $$2,655,900.$ However, Samson insisted that Jebali redo the doorway; otherwise, the contract price would be reduced. The estimated cost of redoing the doorway is $$170,000.$ In $2025,$ the dispute is settled and Jebali fixed the doorway at a cost of $$136,000.$

a$.$ How much must Jebali include in gross income for these items? What amount of deductions is Jebali allowed for $2024?$

Jebali must include $ $$ X in gross income and is allowed deductions of $ $$ for $2024.$

b$.$ In $2025,$ how much must Jebali include in gross income? What expenses can Jeball deduct in that year?

In $2025,$ Jeball must include : $$ in gross income and may deduct $ $$ as expense in that year.

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Under the completed contract method, no revenue from the contract is recognized until the contract is completed and accepted.