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    In 2004, Beth Botsford Construction Corp. began construction work under a 3-year contract. How much cash was collected in 2004 on this contract? What was the initial estimated total income before tax on this contract?

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    5. (Analysis of Percentage-of-Completion Financial Statements) In 2004, Beth Botsford Construction Corp. began construction work under a 3-year contract. The contract price was $1,000,000. Beth Botsford 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, 2004, follow.

    Balance Sheet

    Accounts receivable-construction contract billings $21,500
    Construction in progress $65,000
    Less: Contract billings 61,500
    --------

    Cost of uncompleted contract in excess of billings 3,500
    Income Statement
    Income (before tax) on the contract recognized in 2004 $18,200

    Instructions
    a. How much cash was collected in 2004 on this contract?
    b. What was the initial estimated total income before tax on this contract?

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