In 2007, Johnson Builders began construction work under a three-year contract at a price of $7,525,000. The firm uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of cost incured to the total estimated costs for completing the contract. The financial statement presentations relating to this contract on December 31, 2007, are:
Balance Sheet
Accounts receivable $150,500
Construction in progress $602,000
Less progress billings $562,000 40,000
Income Statement
Gross profit on construction $301,000
Determine the estimated income on the construction contract.