On January 1, 2006, Builder Associates entered into a $1,000,000 long-term, fixed-price contract to construct a factory building for Manufacturing Company. Builder accounts for this contract under the percentage-of-completion, and estimated costs at completion at the end of each quarter for 2006 were as follows:

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Quarter

Estimated percentage-of-completion

Estimated costs at completion

1

10%

$750,000

2[*]

10%

$750,000

3

25%

$960,000

4[*]

25%

$960,000

What amounts should be reported by Builder as “Income on Construction Contract” in its quarterly income statements based on the above information?

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Gain (loss) for the three months ended

3/31/06

6/30/06

9/30/06

12/31/06

a.

$0

$0

$0

$10,000

b.

$25,000

$0

$(15,000)

$0

c.

$25,000

$0

$0

$0

d.

$25,000

$0

$ 6,000

$0