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 $2,120,000 were incurred, with estimated costs of $4,120,000 yet to be incurred. Billings of $2,644,000 were sent, and cash collected was $2,370,000. In 2022, costs incurred were $2,644,000 with remaining costs estimated to be $3,780,000. 2022 billings were $2,894,000, and $2,595,000 cash was collected. The project was completed in 2023 after additional costs of $3,920,000 were incurred. The company's fiscal year-end is December 31. This project does not qualify for revenue recognition over time. Required: 1. Calculate the amount of revenue and gross profit or loss to be recognized in each of the three years. 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. Req 1 Req 2A Req 2B Req Req 3B Calculate the amount of revenue and gross profit or loss to be recognized in each of the three years. (Loss amounts should be indicated with a minus sign.) Year Revenue recognized Gross profit (loss) recognized 2021 2022 2023 Total $ 0 $ 0 Prepare journal entries for 2021 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.) View transaction list Journal entry worksheet 1 2 3 4 > Record the construction costs. Note: Enter debits before credits. Year General Journal Debit Credit 2021 Record entry Clear entry View general journal Prepare journal entries for 2021 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.) View transaction list Journal entry worksheet 1 N 3 4 Record the progress billings. Note: Enter debits before credits. General Journal Debit Credit Year 2021 Prepare journal entries for 2021 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.) View transaction list Journal entry worksheet Record the cash collections. Note: Enter debits before credits. Year General Journal Debit Credit 2021 Record entry Clear entry View general journal Prepare journal entries for 2021 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.) View transaction list Journal entry worksheet Record the gross profit or loss. Note: Enter debits before credits. Year General Journal Debit Credit 2021 Record entry Clear entry View general journal 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.) View transaction list Journal entry worksheet Record the cash collections. Note: Enter debits before credits. Year General Journal Debit Credit 2022 Record entry Clear entry View general journal Prepare journal entries for 2022 to record the transactions described (credit "various accounts" for construction costs incurred). (If no entry i Homework 3r a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet
