On February 1, 2024, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,300,000. During 2024, costs of $2,100,000 were incurred with estimated costs of $4,100,000 yet to be incurred. Billings of $2,600,000 were sent, and cash collected was $2,350,000. In 2025, costs incurred were $2,600,000 with remaining costs estimated to be $3,750,000. 2025 billings were $2,850,000, and $2,575,000 cash was collected. The project was completed in 2026 after additional costs of $3,900,000 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. 2a. Prepare journal entries for 2024 to record the transactions described (credit "Cash, Materials, etc." for construction costs incurred). 2b. Prepare journal entries for 2025 to record the transactions described (credit "Cash, Materials, etc." for construction costs incurred).

On February 1, 2024, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,300,000. During 2024, costs of $2,100,000 were incurred with estimated costs of $4,100,000 yet to be incurred. Billings of $2,600,000 were sent, and cash collected was $2,350,000. In 2025, costs incurred were $2,600,000 with remaining costs estimated to be $3,750,000. 2025 billings were $2,850,000, and $2,575,000 cash was collected. The project was completed in 2026 after additional costs of $3,900,000 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. 2a. Prepare journal entries for 2024 to record the transactions described (credit "Cash, Materials, etc." for construction costs incurred). 2b. Prepare journal entries for 2025 to record the transactions described (credit "Cash, Materials, etc." for construction costs incurred).

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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