On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,510,000. During 2018, costs of $2,170,000 were incurred with estimated costs of $4,170,000 yet to be incurred. Billings of $2,670,000 were sent, and cash collected was $2,420,000. In 2019, costs incurred were $2,670,000 with remaining costs estimated to be $3,855,000. 2019 billings were $2,920,000 and $2,645,000 cash was collected. The project was completed in 2020 after additional costs of $3,970,000 were incurred. The companys 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.

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? (Do not round intermediate calculations. Loss amounts should be indicated with a minus sign. Round your final answers to the nearest whole dollar.)

Percentages of completion
	Choose numerator		Choose denominator	=	% complete to date
	Actual costs to date		Estimated total costs
2018	$2,170,000		$6,340,000	=	34.2271%
2019	$4,840,000		$8,695,000	=	55.6642%
2020					100.0000%
2018
	To date	Recognized in prior years		Recognized in 2018
Construction revenue	$2,912,729			$2,912,729
Construction expense	$2,170,000			$2,170,000
Gross profit (loss)	$742,729			$742,729
2019
	To date	Recognized in prior years		Recognized in 2019
Construction revenue	$4,737,021	$2,912,729		$1,824,292
Construction expense		$2,170,000		$(2,170,000)
Gross profit (loss)		$742,729		$(742,729)
2020
	To date	Recognized in prior years		Recognized in 2020
Construction revenue	$8,510,000	$4,737,021		$3,772,979
Construction expense	$8,810,000			$8,810,000
Gross profit (loss)	$(300,000)			$(300,000)

2) .Prepare journal entries for 2018 to record the transactions described (credit "various accounts" for construction costs incurred). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your answers to the nearest dollar amount.)

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.

3) .Prepare journal entries for 2019 to record the transactions described (credit "various accounts" for construction costs incurred). (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your answers to the nearest dollar amount.)

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.

4) .Prepare a partial balance sheet to show the presentation of the project as of December 31, 2018. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.)

Balance Sheet (Partial)
At December 31, 2018
Current assets:
Current liabilities:

5) .

Prepare a partial balance sheet to show the presentation of the project as of December 31, 2019. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.)

Balance Sheet (Partial)
At December 31, 2019
Current assets:
Current liabilities: