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E18-4 Nilsen Company started a construction job

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E18-4 (Recognition of Profit on Long-Term Contracts) During 2010 Nilsen Company started a construction job with a contract price of $1,600,000. The job was completed in 2012. The following information is available.


  2010 2011 2012
Cost incurred to date  400,000  825,000  1,070,000
Estimated costs to complete  600,000  275,000  -  
Billings to date  300,000  900,000  1,600,000
Collection to date    270,000  810,000  1,425,000

Instructions
(a) Compute the amount of gross profit to be recognized each year assuming the percentage-ofcompletion
method is used.
(b) Prepare all necessary journal entries for 2011.
(c) Compute the amount of gross profit to be recognized each year assuming the completed-contract
method is used.

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