Question:

Deen Construction began a construction project in 2018. The contract price was $1,250,000, and the estimated costs were $1,000,000. Data for each year of the contract are as follows:

	2018	2019	2020
Costs incurred during the year	250,000	600,000	190,000
Estimated costs to complete	750,000	212,500	0
Partial billings	375,000	500,000	375,000
Collections	187,500	469,000	593,500

Instructions:

1. Assuming Deen the percentage of completion method:

(a) Create a schedule that computes the gross profit for 2018 - 2020.

(b) Determine the net amount for construction in progress inventory should be reported on the 2018 balance sheet.

(c) Create all the necessary journal entries for 2019.

2. Compute the amount of gross profit to be recognized each year, assuming

the completed contract method is used.

Show all supporting calculations please.