Problem - In 2014, Steinrotter Construction Corp. began construction work under a 3-year contract. The contract price was $3,100,000. Steinrotter uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of cost incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2014, are shown below.
Balance Sheet
- Accounts receivable $55,800
- Construction in process 201,500
- Less: Billings 190,650
- Costs and recognized profit in excess of billings 10,850
Income Statement
- Income (before tax) on the contract recognized in 2014 $60,450
How much cash was collected in 2014 on this contract?
What was the initial estimated total income before tax on this contract?