Pharoah Construction Company has entered into a contract beginning January 1, 2025, to build a parking complex. It has been estimated that the complex will cost $600,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $901,000. The following data pertain to the construction period. Costs to date Estimated costs to complete Progress billings to date Cash collected to date (a) $246,000 2025 Gross profit recognized in 2026 354,000 Gross profit recognized in 2027 270,000 240,000 Gross profit recognized in 2025 $ $ 2026 $ $432,000 168,000 546,000 496,000 2027 Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period. (If answer is 0, please enter O. Do not leave any fields blank.) $612,000 -0- 901,000 901,000

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Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.