E 6-21 Long-term contract; revenue recognition over time; loss projected on entire project LO6-9 On February 1, 2024, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,000,000. During 2024 , costs of $2,000,000 were incurred with estimated costs of $4,000,000 yet to be incurred. Billings of $2,500,000 were sent, and cash collected was $2,250,000. In 2025 , costs incurred were $2,500,000 with remaining costs estimated to be $3,600,000. 2025 billings were $2,750,000, and $2,475,000 cash was collected. The project was completed in 2026 after additional costs of $3,800,000 were incurred. The company's fiscal year-end is December 31. Arrow recognizes revenue over time according to percentage of completion. Required: 1. Calculate the amount revenue and gross profit or loss to be recognized in each of the three years. 2. Prepare journal entries for 2024 and 2025 to record the transactions described (credit "various accounts" for construction costs incurred). 3. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2024 and 2025