On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,090,000. During 2021, costs of $2,030,000 were incurred with estimated costs of $4,030,000 yet to be incurred. Billings of $2,530,000 were sent, and cash collected was $2,280,000. In 2022, costs incurred were $2,530,000 with remaining costs estimated to be $3,645,000.2022 billings were $2,780,000 and $2,505,000 cash was collected. The project was completed in 2023 after additional costs of $3,830,000 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. Reg 1 Reg 2A Reg 2B Req Reg 3B Compute the amount of revenue and gross profit or loss to be recognized in 2021, 2022, and 2023 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.) = % complete to date > > > 2021 $ II $ $ $ 2022 2023 33.4983% 55.5759% 100.0000% $ Percentages of completion Choose numerator Choose denominator Actual costs to date Estimated total costs 2,030,000 6,060,000 4,560,000 8,205,000 8,390,000 $ 8,390,000 2021 To date Recognized in prior years 2,710,150 $ 0 2,030,000 $ 0 680,150 0 $ Construction revenue Construction expense Gross profit (loss) EA A $ $ $ $ Recognized in 2021 2,710,150 2,030,000 680,150 $ $ 2022 To date Recognized in prior years 4,496,422 $ 2,710,150 7,206,572 X $ 2,030,000 (795,017) $ 680,150 Construction revenue Construction expense Gross profit (loss) $ Recognized in 2022 1,786,272 5,176,572 (1,475,167) $ $ Construction revenue Construction expense Gross profit (loss) 2023 To date Recognized in prior years 8,090,000 $ 4,490,346 $ 3,593,578 $ 4,626,346 $ (185,000) $ (136,000) X $ Recognized in 2023 3,599,654 (1,032,768) (49,000) $ $ Reg 1 Reg 2A Reg 2B Req 3A Req 3B 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. Do not round intermediate calculations. Round your answers to the nearest dollar amount.) Year General Journal Credit No 1 Debit 2,030,000 2021 Construction in progress Various accounts 2,030,000 2 2021 2,530,000 Accounts receivable Billings on construction contract 2,530,000 3 2021 2,280,000 Cash Accounts receivable 2,280,000 4 2021 Construction in progress Cost of construction Revenue from long-term contracts 680,017 2,030,000 2,710,017 Req 1 Reg 2A Reg 2B Req 3A Reg 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.) No Credit Year 2022 General Journal Construction in progress Various accounts Debit 2,530,000 1 2,530,000 2 2022 2,780,000 Accounts receivable Billings on construction contract 2,780,000 3 2022 2,505,000 Cash Accounts receivable 2,505,000 4 2022 2,581,088 Cost of construction Construction in progress Revenue from long-term contracts 795,017 1,786,071 Reg 1 Reg 2A Reg 2B Req Req 3B Prepare a partial balance sheet to show the presentation of the project as of December 31, 2021. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.) Balance Sheet (Partial) At December 31, 2021 Current assets: Accounts receivable Costs and profit in excess of billings 250,000 180,017 Current liabilities: Req 1 Reg 2A Reg 2B Reg Req 3B Prepare a partial balance sheet to show the presentation of the project as of December 31, 2022. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.) Balance Sheet (Partial) At December 31, 2022 Current assets: Accounts receivable 525,000 Current liabilities: Billings in excess of costs less loss 865,000
