On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,000,000. During 2018, 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 2019, costs incurred were $2,500,000 with remaining costs estimated to be $3,600,000. 2019 billings were $2,750,000, and $2.475,000 cash was collected. The project was completed in 2020 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. Compute the amount of revenue and gross profit or loss to be recognized in 2018, 2019 and 2020 using the percentage of completion method? 2a. Prepare journal entries for 2018 to record the transactions described (credit various accounts for construction costs incurred). 2b. Prepare journal entries for 2019 to record the transactions described (credit various accounts for construction costs incurred). 3a. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2018 3b. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2019 Percentages of completion Choose numerator Choose denominator = % complete to date 2018 2019 2020 100.0000% 2018 Recognized in prior years To date Recognized in 2018 ces Construction revenue Construction expense Gross profit (loss) 2019 Recognized in prior years To date Recognized in 2019 Construction revenue Construction expense Gross profit (loss) 2020 Recognized in prior years To date Recognized in 2020 Construction revenue Construction expense Gross profit (loss) $ Prepare journal entries for 2018 to record the transactions described (credit "various account entry is required for a transaction/event, select "No journal entry required" in the first accou calculations, Round your answers to the nearest dollar amount.) View transaction list 1 Record the construction costs. 2 Record the progress billings. 3 Record the cash collections. 4 Record the gross profit. 5 Record the expected loss. Credit Note : = journal entry has been entered Record entry Clear entry View general journal Req1 Req 2A Req 2B Req 3A Reg 3B Prepare journal entries for 2019 to record the transactions described (credit "various accounts" | entry is required for a transaction/event, select "No journal entry required" in the first account 1 calculations. Round your answers to the nearest dollar amount.) View transaction list 1 Record the construction costs. 2 Record the progress billings. 3 Record the cash collections. 4 Record the gross profit. 5 Record the expected loss. Credit Reg 1 Req 2A Req 2B Req 3A Req 3B Prepare a partial balance sheet to show the presentation of the project as calculations. Round your answers to the nearest dollar amount.) Balance Sheet (Partial) At December 31, 2018 ook Current assets: rint rences Current liabilities:
