Timothy Construction Company was formed on January 2, 2020. The unadjusted trial balance on December 31, 2021, included a debit balance of $8,160,000 in the construction in progress account. This account includes two ongoing construction projects, both of which started in 2020. The percentage of completion method is used for both projects. Data on these projects is as follows:

Timothy Project 001 – Total contract price = $4,200,000

	2020	2021
Costs incurred	$1,200,000	$2,200,000
Expected costs to complete	2,300,000	850,000

The input method using total costs is used to measure the percentage of completion of this project.

Timothy Project 002 – Total contract price = $5,400,000

	2020	2021
Costs incurred	$1,600,000	$2,600,000
Expected costs to complete	3,000,000	880,000

The output method is used to measure the percentage of completion of this project. The percentages of completion in 2020 and 2021 are 40% and 82% respectively.

Write the adjusting journal entries for these two projects at December 31, 2021. In addition, you are also required to prepare a schedule that reconciles to the balance in the Construction in Progress account (i.e. show how the balance in the construction in progress account was arrived at).