On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,000,000. During 2021, 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 2022, costs incurred were $2,500,000 with remaining costs estimated to be $3,600,000. 2022 billings were $2,750,000, and $2,475,000 cash was collected. The project was completed in 2023 after additional costs of $3,800,000 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 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.

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.)

Percentages of completion
	Choose numerator		Choose denominator	=	% complete to date
	Actual costs to date		Estimated total costs
2021	$2,000,000		$6,000,000	=	33.3333%
2022	$4,500,000		$8,100,000	=	55.5556%
2023	$8,300,000		$8,300,000	=	100.0000%
2021
	To date	Recognized in prior years		Recognized in 2021
Construction revenue	$2,666,400	$0		$2,666,400
Construction expense	$2,000,000	$0		$2,000,000
Gross profit (loss)	$666,667	$0		$666,667
2022
	To date	Recognized in prior years		Recognized in 2022
Construction revenue	$4,444,800			$4,444,800
Construction expense		$2,000,000		$(2,000,000)
Gross profit (loss)				$0
2023
	To date	Recognized in prior years		Recognized in 2023
Construction revenue	$8,000,000	$0		$8,000,000
Construction expense	$8,300,000	$8,300,000		$0
Gross profit (loss)	$0	$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. Do not round intermediate calculations. Round your answers to the nearest dollar amount.)

No	Year	General Journal	Debit	Credit
1	2021	Construction in progress	2,000,000
		Various accounts		2,000,000
2	2021	Accounts receivable	2,500,000
		Billings on construction contract		2,500,000
3	2021	Cash	2,500,000
		Accounts receivable		2,500,000
4	2021	Cost of construction	2,544,445
		Construction in progress		1,777,778
		Revenue from long-term contracts		766,667