70.2K

Verified Solution

Link Copied!

On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,600,000. During 2021, costs of $2,200,000 were incurred with estimated costs of $4,200,000 yet to be incurred. Billings of $2,700,000 were sent, and cash collected was $2,450,000. In 2022, costs incurred were $2,700,000 with remaining costs estimated to be $3,900,000. 2022 billings were $2,950,000 and $2,675,000 cash was collected. The project was completed in 2023 after additional costs of $4,000,000 were incurred. The companys fiscal year-end is December 31. Arrow recognizes revenue over time according to percentage of completion. Required: 1. Compute the amount of revenue and gross profit or loss to be recognized in 2021, 2022, and 2023 using the percentage of completion method. 2a. Prepare journal entries for 2021 to record the transactions described (credit "various accounts" for construction costs incurred).

• Req 3B

Prepare journal entries for 2021 to record the transactions described (credit "various accounts" for construction costs incurred). (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

• Record the construction costs.

Note: Enter debits before credits.

1

	Year General Journal Debit Credit 2021

Journal entry worksheet

• Record the progress billings.

Note: Enter debits before credits.

2

	Year General Journal Debit Credit 2021

Prepare journal entries for 2021 to record the transactions described (credit "various accounts" for construction costs incurred). (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

• Record the cash collections.

Note: Enter debits before credits.

3

	Year General Journal Debit Credit 2021

Journal entry worksheet

• Record the gross profit or loss.

Note: Enter debits before credits.

4

	Year General Journal Debit Credit 2021

Answer & Explanation Solved by verified expert

See Answer