February 1, 2021, Arrow Construction Company entered into a three-year construction.contract to build a bridge for a price of 325,000. During 2021, costs of $2,130,000 were incurred, with estimated costs of $4,130,000 yet to be incurred. Billings of 656,000 were sent, and cash collected was $2,380,000. 2022, costs incurred were $2,656,000 with remaining costs estimated to be $3,795,000. 2022 billings were $2,906,000, and 605,000 cash was collected. The project was completed in 2023 after additional costs of $3,930,000 were incurred. The mpany's fiscal year-end is December 31. This project does not qualify for revenue recognition over time. quired: Calculate the amount of revenue and gross profit or loss to be recognized in each of the three years. -Prepare Joumal entries for 2021 to record the transactions described (credit "various accounts" for construction costs incurredi - Prepare journal entries for 2022 to record the transactions described (credit "various accounts" for construction costs incurrec -Prepare a partial balance sheet to show the presentation of the project as of December 31, 2021.
February 1, 2021, Arrow Construction Company entered into a three-year construction.contract to build a bridge for a price of 325,000. During 2021, costs of $2,130,000 were incurred, with estimated costs of $4,130,000 yet to be incurred. Billings of 656,000 were sent, and cash collected was $2,380,000. 2022, costs incurred were $2,656,000 with remaining costs estimated to be $3,795,000. 2022 billings were $2,906,000, and 605,000 cash was collected. The project was completed in 2023 after additional costs of $3,930,000 were incurred. The mpany's fiscal year-end is December 31. This project does not qualify for revenue recognition over time. quired: Calculate the amount of revenue and gross profit or loss to be recognized in each of the three years. -Prepare Joumal entries for 2021 to record the transactions described (credit "various accounts" for construction costs incurredi - Prepare journal entries for 2022 to record the transactions described (credit "various accounts" for construction costs incurrec -Prepare a partial balance sheet to show the presentation of the project as of December 31, 2021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On February 1, 2021, Arrow Construction Company entered into a three-year construction.contract to build a bridge for a price of
$8,325,000. During 2021, costs of $2,130,000 were incurred, with estimated costs of $4,130,000 yet to be incurred. Billings of
$2,656,000 were sent, and cash collected was $2,380,000.
In 2022, costs incurred were $2,656,000 with remaining costs estimated to be $3,795,000. 2022 billings were $2,906,000, and
$2,605,000 cash was collected. The project was completed in 2023 after additional costs of $3,930,000 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 Joumal entries for 2021 to record the transactions described (credit "varlous accounts" for construction costs incurred).
2b. Prepare joumal 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.
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