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E18-4B (Recognition of Profit on Long-Term Contracts) During 2007 AFCO started a construction job

E18-4B (Recognition of Profit on Long-Term Contracts) During 2007 AFCO started a construction job with a contract price of $2,500,000. The job was completed in 2009. The following information is available.

                                                2007            2008             2009
Costs incurred to date              $ 600,000    $1,435,000   $2,100,000
Estimated costs to complete     1,400,000    615,000        –0–
Billings to date                         100,000       500,000        2,500,000
Collections to date                   100,000       300,000        2,000,000

Instructions
(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 2008.
(c) Compute the amount of gross profit to be recognized each year assuming the completed-contract method is used.

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