Island Builders, Inc., has consistently used the percentage-of-completion method of accounting for construction type contracts. During 2004 Island Builders started work on a $9,000,000 fixed-price construction contract that was completed in 2006, Island Builders’ accounting record disclosed the following:

Question

Island Builders, Inc., has consistently used the percentage-of-completion method of accounting for construction type contracts.  During 2004 Island Builders started work on a $9,000,000 fixed-price construction contract that was completed in 2006, Island Builders’ accounting record disclosed the following:
								December 31		
							2004			2005
	Cumulative contract costs incurred		$3,900,000		$6,300,000
	Estimated total costs at completion		  7,800,000		  8,100,000

How much of income would Island Builders Inc. have recognized for the year ended December 31, 2005?
a.	$100,000
b.	$300,000
c.	$600,000
d.	$700,000