On February 1, 2024, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,570,000. During 2024, costs of $2,190,000 were incurred with estimated costs of $4,190,000 yet to be incurred. Billings of $2,690,000 were sent, and cash collected was $2,440,000.

In 2025, costs incurred were $2,690,000 with remaining costs estimated to be $3,885,000. 2025 billings were $2,940,000, and $2,665,000 cash was collected. The project was completed in 2026 after additional costs of $3,990,000 were incurred. The companys fiscal year-end is December 31. Arrow recognizes revenue over time according to percentage of completion.

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 2024 to record the transactions described (credit "Cash, Materials, etc." for construction costs incurred).

2b. Prepare journal entries for 2025 to record the transactions described (credit "Cash, Materials, etc." for construction costs incurred).

3a. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2024.

3b. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2025.

Complete this question by entering your answers in the tabs below.

• Req 1
• Req 2A
• Req 2B
• Req 3A
• Req 3B

Calculate the amount of revenue and gross profit or loss to be recognized in each of the three years. Note: 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
2024	$2,190,000		$6,380,000	=	34.3260%
2025	$4,880,000		$8,765,000	=	55.6760%
2026	$8,870,000		$8,870,000		100.0000%
2024
	To date	Recognized in prior years	Recognized in 2024
Construction revenue		$0	$0
Construction expense		-	$0
Gross profit (loss)			$0
2025
	To date	Recognized in prior years	Recognized in 2025
Construction revenue		$0	$0
Construction expense			$0
Gross profit (loss)			$0
2026
	To date	Recognized in prior years	Recognized in 2026
Construction revenue		$0	$0
Construction expense			$0
Gross profit (loss)			$0

Prepare journal entries for 2024 to record the transactions described (credit "Cash, Materials, etc." for construction costs incurred). Note: 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.

Journal entry worksheet

• Record the construction costs.

Note: Enter debits before credits.

Journal entry worksheet

• Record the progress billings.

Note: Enter debits before credits.

Journal entry worksheet

• Record the cash collections.

Note: Enter debits before credits.

Journal entry worksheet

• Record the gross profit or loss.

Note: Enter debits before credits.

Prepare journal entries for 2025 to record the transactions described (credit "Cash, Materials, etc." for construction costs incurred). Note: 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.

Journal entry worksheet

• Record the construction costs.

Note: Enter debits before credits.

Journal entry worksheet

• Record the progress billings.

Note: Enter debits before credits.

Journal entry worksheet

• Record the cash collections.

Note: Enter debits before credits.

Journal entry worksheet

• Record the gross profit or loss.

Note: Enter debits before credits.

Year	General Journal	Debit	Credit
2025

Prepare a partial balance sheet to show the presentation of the project as of December 31, 2024. Note: Do not round intermediate calculations. Round your answers to the nearest dollar amount.

Balance Sheet (Partial)
At December 31, 2024
Current assets:
Current liabilities:

Prepare a partial balance sheet to show the presentation of the project as of December 31, 2025. Note: Do not round intermediate calculations. Round your answers to the nearest dollar amount.

Balance Sheet (Partial)
At December 31, 2025
Current assets:
Current liabilities: