Part Three: Problem - Long-term contracts (20 points) During 2020, Nilsen Company started a construction job with a contract price of $1,600,000. The job was completed in 2022. The following information is available. 2020 2021 2022 Costs incurred to date $400,000 $825,000 $1,070,000 Estimated costs to complete 600,000 275,000 -0- Billings to date 300,000 900,000 1,600,000 Collections to date 270,000 810,000 1,425,000 Required: (show all your calculations) a. Compute the amount of gross profit to be recognized each year, assuming the percentage- of-completion method is used. b. Prepare all necessary journal entries for 2021. C. Compute the amount of gross profit to be recognized each year, assuming the completed- contract method is used. Bonus: Problem - Sales revenue, sales returns and allowances (10 points) On March 10, 2020, Steele Company sold to Barr Hardware 200 tool sets at a price of $50 each (cost $30 per set) with terms of n/60, f.0.b. shipping point. Steele allows Barr to return any unused tool sets within 60 days of purchase. Steele estimates that (1) 10 sets will be returned, (2) the cost of recovering the products will be immaterial, and (3) the returned tools sets can be resold at a profit. On March 25, 2020, Barr returned six tool sets and received a credit to its account. Required: (show all your calculations) a. Prepare journal entries for Steele to record (1) the sale on March 10, 2020, (2) the return on March 25, 2020, and (c) any adjusting entries required on March 31, 2020 (when Steele prepares financial statements). Steele believes the original estimate of returns is correct. b. Indicate the income statement and balance sheet reporting by Steele at March 31, 2020, of the information related to the Barr sales transaction. 4. Calculate how the transaction price should be allocated to the performance obligations according to the market assessment approach. Show all calculations. B. Fill the following table for each performance obligation identified. List each performance Specify whether Specify the date or Specify the amount obligation each performance dates in 2020 when of revenue obligation is each performance recognized when satisfied at a point obligation is each performance in time or over a satisfied obligation is period of time satisfied C. Prepare all the journal entries that Ocean Pool Company should make during 2020 to account for this contract. Specify the date of each journal entry. Date Accounts Title and Explanation Ref. Debit Credit