Un 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 company's fiscal year-end is December 31. This project does not qualify for revenue recognition over time. 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 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. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Reg 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. (Loss amounts should be indicated with a minus sign.) Year 2021 2022 2023 Total Revenue Gross profit (loss) recognized recognized $ 666,667 $ 0 (766,667) (100,000) (200,000) (200,000) $ 300,000 $ (300,000) Reg 1 Req 2A Req 2B Req Req 3B 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.) No Credit Year 2021 General Journal Construction in progress Various accounts Debit 2,000,000 2,000,000 2021 2,500,000 Accounts receivable Billings on construction contract 2,500,000 2021 2,250,000 Cash Accounts receivable 2,250,000 2021 Construction in progress Billings on construction contract Service revenue 666,667 2,000,000 2,666,667 X Req 1 Reg 2A Req 2A Reg 2B Req 3A Reg 38 Req 3B Prepare a partial balance sheet to show the presentation of the project Balance Sheet At December 31, 2021 Current assets: Accounts receivable $ 250,000 Current liabilities: Billings in excess of costs $ 166,667 X
