Exercise $6-21($Algo$)$ Long$-$term contract; revenue recognition over time; loss projected on entire project $[$LO$6-9]$

On February $1,2024,$ Arrow Construction Company entered into a three$-$year construction contract to build a bridge for a price of $$8,360,000.$ During $2024,$ costs of $$2,120,000$ were incurred with estimated costs of $$4,120,000$ yet to be incurred. Billings of $$2,620,000$ were sent, and cash collected was $$2,370,000.$

In $2025,$ costs incurred were $$2,620,000$ with remaining costs estimated to be $$3,780,000.2025$ billings were $$2,870,000,$ and $$2,595,000$ cash was collected. The project was completed in $2026$ after additional costs of $$3,920,000$ were incurred. The company$$s fiscal year$-$end is December $31.$ Arrow recognizes revenue over time according to percentage of completion.

Required:

$1.$ Calculate the amount of revenue and gross profit or loss to be recognized in each of the three years.

$2$a$.$ Prepare journal entries for $2024$ to record the transactions described $($credit "Cash, Materials, etc." for construction costs incurred$).$

$2$b$.$ Prepare journal entries for $2025$ to record the transactions described $($credit "Cash, Materials, etc." for construction costs incurred$).$

$3$a$.$ Prepare a partial balance sheet to show the presentation of the project as of December $31,2024.$

$3$b$.$ Prepare a partial balance sheet to show the presentation of the project as of December $31,2025.$