Exercise $6-22($Algo$)$ Long$-$term contract; revenue recognition upon project completion; loss projected on entire project $[$LO$6-8,6-9]$

On February $1,2024,$ Arrow Construction Company entered into a three$-$year construction contract to build a bridge for a price of $$8,425,000.$ During $2024,$ costs of $$2,170,000$ were incurred, with estimated costs of $$4,170,000$ yet to be incurred. Billings of $$2,704,000$ were sent, and cash collected was $$2,420,000.$

In $2025,$ costs incurred were $$2,704,000$ with remaining costs estimated to be $$3,855,000\mathrm{.}2025$ billings were $$2,954,000,$ and $$2,645,000$ cash was collected. The project was completed in $2026$ after additional costs of $$3,970,000$ were incurred. The company's fiscal year$-$end is December $31.$ This project does not qualify for revenue recognition over time.

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 $31,2025.$

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