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1. Gow Constructors, Inc. has consistently used the percentage-of-completion method of recognizing income. In Year 1, Gow started work on an $18,000,000 construction contract that was completed in Year 2. The following information was taken from Gow’s Year 1 accounting records:

Progress billings $ 6,600,000

Costs incurred 5,400,000

Collections 4,200,000

Estimated costs to complete 10,800,000

What amount of gross profit should Gow have recognized in Year 1 on this contract?

2. The next item is based on the following data pertaining to Pell Co.’s construction jobs, which commenced during 1992:

Project 1 Project 2

Contract price $ 420,000 $ 300,000

Costs incurred during 1992 240,000 280,000

Estimated costs to complete 120,000 40,000

Billed to customers during 1992 150,000 270,000

Received from customers during 1992 90,000 250,000

If Pell used the completed contract method, what amount of gross profit (loss) would Pell report in its 1992 income statement?

How come for this one they just solved all the way down through the percentage to get g/p earned to date but the second problem just ask you to stop after subtracting contract price and total cost? What’s the difference in the wording?