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 $$8,390,000.$ During $2024,$ costs of $$2,130,000$ were incurred with estimated costs of $$4,130,000$ yet to be incurred. Billings of $$2,630,000$ were sent, and cash collected was $$2,380,000.$

In $2025,$ costs incurred were $$2,630,000$ with remaining costs estimated to be $$3,795,000.2025$ billings were $$2,880,000,$ and $$2,605,000$ cash was collected. The project was completed in $2026$ after additional costs of $$3,930,000$ 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 $31,2025.$

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

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.

$\backslash$table$[[$Percentages of completion$],[2024,$$ $2,130,000,+,$$$,6,260,000,=,34\mathrm{.}0256\%],[2025,,+,,,=,0],[2025,,,,,,0],[2024]]$

Req $1$

Req $2$A

Req $2$B

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 whole dollar.

$\backslash$table$[[$Percentages of completion$],[.2024,$$ $2,130,000,$$$6,260,000,=,],[2025,,,-,34\mathrm{.}0256\%],[2026,,,,0],[2024],[],[,$To date,Recognized in prior years,Recognized in $2024],[$Construction revenue,,,$$,0],[$Construction expense,,,$$,0],[$Gross profit $($loss$),,,$$$,0],[2025],[,$To date,Recognized in prior years,Recognized in $2025],[$Construction revenue,,,$$,0],[$Construction expense,,,$$,0],[$Gross profit $($loss$),,,$$$,0],[2026],[,$To date,Recognized in prior years,Recognized in $2026],[$Construction revenue,,,$$,0],[$Construction expense,,,$$,0],[$Gross profit $($loss$),,,$$$,0]]$

Req $1$

Req $2$A

Req $2$B

Req $3$A

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

$1$

$2$

$3$

$4$

Record the construction costs.

Note: Enter debits before credits.

$\backslash$table$[[$Year$,$General Journal,Debit,Credit$],[2024,,,],[,,,],[,,,],[,,,],[,,,]]$

$$

Req $1$

Req $2$B

Req $3$B

Prepare journal entries for $2025$ to record the transactions described $($credit "Cash, Materials, etc." for construction costs in Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field. Do not rour intermediate calculations. Round your answers to the nearest dollar amount.

Journal entry worksheet

$1$

$2$

$3$

$4$

Record the construction costs.

Note: Enter debits before credits.

$\backslash$table$[[$Year$,$General Journal,Debit,Credit$],[2025,,,],[,,,],[,,,],[,,,],[,,,]]$

$$

$$

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

Req $1$

Req $2$A

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.

$\backslash$table$[[$Balance Sheet $($Partial$),],[$At December $31,2024,],[$Current assets:,$],[,],[,],[$Current liabilities:,$],[,]]$

Req $3$B

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

Req $3$A

Req $3$B

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.

$\backslash$table$[[$Balance Sheet $($Partial$),],[$At December $31,2025,],[$Current assets:,$],[,],[,],[,],[,],[$Current liabilities:,$],[,],[,]]$

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