On January $1,2017,$ ABC Contractors agreed to construct a building at a contract price of

$8,000,000.$ ABC estimated total construction costs would be $7,000,000$ and the project

would be finished in $2019.$ Information relating to the costs and billings for this contract is as

follows:

Instructions

Prepare the necessary journal entries to record costs incurred, billings and cash collection

for $2010,2011$ and $2012.$

Using the percentage$-$of$-$completion method, compute the estimated gross profit that would

be recognized during each year of the construction period. Record the necessary journal

entries to record the gross profit for each year.

Using the cost$-$recovery, compute the estimated gross profit that would be recognized

during each year of the construction period. Record the necessary journal entries to record

the gross profit for each year.