Reference no: EM13567799

In 2013, the company entered into a contract to construct a road for a customer for $10,000,000. The road was completed in 2015. Information related to the contract is as follows:

2013 2014 2015

Billings during year      $ 2,000,000 $4,000,000 $4,000,000 Cash collections during year $ 1,800,000 $3,600,000 $4,600,000 Contract price   $ 10,000,000   $ 10,000,000 $ 10,000,000 Cost incurred $ 2,400,000    $ 3,600,000 $2,200,000 Estimated cost to complete   $ 5,600,000 $ 2,000,000 --

The company uses the percentage-of-completion method of accounting for long-term construction contracts.

1. Calculate the amount of gross profit to be recognized in each of the three years.

2. Prepare a partial balance sheet for each year showing the items related to the contract.