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Steinrotter Construction Corp. began construction work

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E18-5 (Analysis of Percentage-of-Completion Financial Statements) In 2010, Steinrotter Construction Corp. began construction work under a 3-year contract. The contract price was $1,000,000. Steinrotter uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of cost incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2010, follow.

Accounts receivable 18,000
Construction in process 65,000
Less: contracts billings 61,500
Cost of uncompleted 3,500

Income Statement
Income (before tax) on the contract recognized in 2010 $19,500

Instructions
(a) How much cash was collected in 2010 on this contract?
(b) What was the initial estimated total income before tax on this contract?

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