Pumpkin Company has contracted to build for the city of Peoria a new school. The estimated cost is $7,000,000 and the contract price is $10,000,000. The school took three years to complete as follows: Costs to Date Costs to Complete Amounts Billed to Date Collections to Date 2025 $3,500,000 $3,500,000 2026 $5,250,000 $2,000,000 2027 $3,300,000 $1,300,000 $5,300,000 $7,250,000 $0 $6,700,000 $10,000,000 $10,000,000 Determine using the percentage of completion method the gross profit to be recognized for: 2025 2027 2026 Determine using the Cost Plus or completed contract method the gross profit to be recognized for : 2025 2026 2027

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…