On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,300,000. During 2021, costs of $2,100,000 were incurred with estimated costs of $4,100,000 yet to be incurred. Billings of $2,600,000 were sent, and cash collected was $2,350,000. In 2022, costs incurred were $2,600,000 with remaining costs estimated to be $3,750,000. 2022 billings were $2,850,000 and $2,575,000 cash was collected. The project was completed in 2023 after additional costs of $3,900,000 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 2021, 2022, and 2023 using the percentage of completion method. 2a. Prepare journal entries for 2021 to record the transactions described (credit "various accounts" for construction costs incurred). 2b. Prepare journal entries for 2022 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, 2021. 3b. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2022. + = % complete to date 2021 $ Percentages of completion Choose numerator Choose denominator Actual costs to date Estimated total costs 2,100,000 + $ 6,200,000 4,700,000 + $ 8,450,000 = 8,600,000 $ 8,600,000 2021 = 2022 $ 33.8710% 55.6213% 100.0000% 2023 $ To date Recognized in prior years 2,600,000 $ $ Construction revenue Construction expense Gross profit (loss) Recognized in 2021 5,700,000 2,811,290 2,811,290 8,300,000 $ 2,811,290 $ 2,811,290 $ 0 $ $ $ $ 2022 To date Recognized in prior years Recognized in 2022 Construction revenue $ 0 $ 0 Construction expense Gross profit (loss) $ 0 2023 To date Recognized in prior years Recognized in 2023 Construction revenue $ 0 $ 0 Construction expense Gross profit (loss) $ 0 Reg 1 Req 2A Req 2B Req Req 3B Prepare journal entries for 2021 to record the transactions described (credit "various accounts" for construction costs incurred). (If 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.) View transaction list View journal entry worksheet No Year General Journal Debit Credit 1 2021 Construction in progress 2,100,000 Various accounts 2,100,000 2 2021 Accounts receivable 2,600,000 Billings on construction contract 2,600,000 3 2021 Cash 2,350,000 Accounts receivable 2,350,000 4 2021 Construction in progress 711,290 2,100,000 Cost of construction Revenue from long-term contracts 2,811,290 Req 1 Reg 2A Req 2B Req Req 3B Prepare journal entries for 2022 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.) View transaction list View journal entry worksheet No Year General Journal Debit Credit 1 2022 Construction in progress 2,600,000 Various accounts 2,600,000 2 2022 Accounts receivable 2,850,000 Billings on construction contract 2,850,000 3 2022 Cash 2,575,000 Accounts receivable 2,575,000 4 2022 Cost of construction 2,600,000 Construction in progress 861,290 1,738,710 Revenue from long-term contracts Reg 1 Req 2A Req 2B Req Req 3B Prepare a partial balance sheet to show the presentation of the project as of December 31, 2021. (Do not round intermedi calculations. Round your answers to the nearest dollar amount.) Balance Sheet (Partial) At December 31, 2021 Current assets: Accounts receivable Current liabilities: Billings on construction contract Construction in progress Billings in excess of costs less loss Req 1 Req 2A Req 2B Req Reg 3B Prepare a partial balance sheet to show the presentation of the project as of December 31, 2022 calculations. Round your answers to the nearest dollar amount.) Balance Sheet (Partial) At December 31, 2022 Current assets: Current liabilities: Billings in excess of costs less loss Billings on construction contract
