Exercise $6-21($Algo$)$ Long$-$term contract; revenue recognition over time; loss projected on entire project $[$LO$6-9]$

On February $1,2024,$ Arrow Construction Company entered into a three$-$year construction contract to build a bridge for a price of $$8,210,000.$ During $2024,$ costs of $$2,070,000$ were incurred with estimated costs of $$4,070,000$ yet to be incurred. Billings of $$2,570,000$ were sent, and cash collected was $$2,320,000.$

In $2025,$ costs incurred were $$2,570,000$ with remaining costs estimated to be $$3,705,000.2025$ billings were $$2,820,000,$ and $$2,545,000$ cash was collected. The project was completed in $2026$ after additional costs of $$3,870,000$ were incurred. The company$$s 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.

$2$a$.$ Prepare journal entries for $2024$ to record the transactions described $($credit "Cash, Materials, etc." for construction costs incurred$).$

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

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

$3$b$.$ Prepare a partial balance sheet to show the presentation of the project as of December $31,2025.$ Exercise $6-21($Algo$)$ Long$-$term contract; revenue recognition over time; loss projected on entire project

$[$LO$6-9]$

On February $1,2024,$ Arrow Construction Company entered into a three$-$year construction contract to build a

bridge for a price of $$8,210,000.$ During $2024,$ costs of $$2,070,000$ were incurred with estimated costs of

$$4,070,000$ yet to be incurred. Billings of $$2,570,000$ were sent, and cash collected was $$2,320,000.$

In $2025,$ costs incurred were $$2,570,000$ with remaining costs estimated to be $$3,705,000.2025$ billings were

$$2,820,000,$ and $$2,545,000$ cash was collected. The project was completed in $2026$ after additional costs of

$$3,870,000$ were incurred. The company's fiscal year$-$end is December $31.$ Arrow recognizes revenue over time

according to percentage of completion.

Required:

Calculate the amount of revenue and gross profit or loss to be recognized in each of the three years.

$2$a$.$ Prepare journal entries for $2024$ to record the transactions described $($credit "Cash, Materials, etc." for

construction costs incurred$).$

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

construction costs incurred$).$

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

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

Req $1$

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.

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