Exercise $16-33($Algorithmic$)($LO$.5)$

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 $$6,168,500.$ Jebali finished construction in $2024$ at a cost of $$5,551,650.$ However, Samson insisted that Jebali redo the doorway; otherwise, the contract price would be reduced. The estimated cost of redoing the doorway is $$165,650.$ In $2025,$ the dispute is settled and Jebali fixed the doorway at a cost of $$132,520.$

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 Jebali deduct in that year?

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