Perry Construction Co. accepted a contract to build a warehouse on January 02, 2022. The company will complete the contract within two years. Perry provided the following information related to the revenue, estimated costs, progress billings, and collections over the two-year period.

Contract price is $4,000,000

	2022	2023
Actual construction costs incurred during the year	$ 2,625,000	$ 900,000
Estimated costs to complete	875,000	0
Estimated total costs	3,500,000	3,525,000
Progress billings made during the year	2,400,000	1,600,000
Cash collections	2,000,000	2,000,000

a. Prepare the journal entries for each year to record the contract, assuming Perry uses the percentage of completion method with cost-to-cost approach to progress.

b. Prepare a partial balance sheet for 2022.