On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,390,000. During 2021, costs of $2,130,000 were incurred with estimated costs of $4,130,000 yet to be incurred. Billings of $2,630,000 were sent, and cash collected was $2,380,000. In 2022, costs incurred were $2,630,000 with remaining costs estimated to be $3,795,000. 2022 billings were $2,880,000 and $2,605,000 cash was collected. The project was completed in 2023 after additional costs of $3,930,000 were incurred. The companys fiscal year-end is December 31. Arrow recognizes revenue over time according to percentage of completion.

What is the construction expense and gross profit for the second year 2022? 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.

Exercise 6-21 (Algo) Long-term contract; revenue recognition over time; loss projected on entire proj [LO6-9] On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,390,000. During 2021, costs of $2,130,000 were incurred with estimated costs of $4,130,000 yet to be incurred. Billings of $2,630,000 were sent, and cash collected was $2,380,000. In 2022, costs incurred were $2,630,000 with remaining costs estimated to be $3,795,000. 2022 billings were $2,880,000 and $2,605,000 cash was collected. The project was completed in 2023 after additional costs of $3,930,000 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. = % complete to date Percentages of completion Choose numerator Choose denominator Actual costs to date Estimated total costs 2,130,000 + $ 6,260,000 4,760,000 + $ 8,555,000 8,690,000 $ 8,690,000 2021 $ = 34.0256% 2022 $ 55.6400% 2023 $ 100.0000% 2021 To date Recognized in prior years $ 0 $ Construction revenue Construction expense Gross profit (loss) Recognized in 2021 2,854,744 2,130,000 724,744 2,854,744 $ 2,130,000 $ 724,744 $ $ 0 $ 0 $ 2022 To date Recognized in prior years 2,854,744 $ 4,668,194 $ $ Construction revenue Construction expense Gross profit (loss) Recognized in 2022 1,813,450 (2,130,000) (724,744) $ $ 2,130,000 724,744 $ $ 2023 To date Recognized in prior years 4,668,194 Construction revenue $ $ Recognized in 2023 3,721,806 8,690,000 (300,000) $ 8,390,000 $ 8,690,000 (300,000) Construction expense Gross profit (loss) $ $ $