80.2K

Verified Solution

Link Copied!

$On$ February $1,2024,$ Arrow Construction Company entered into a three$-$year construction contract $to$ build a bridge for a price $of$

$$8,000,000.$ During $2024,$ costs $of$ $$2,000,000$ were incurred with estimated costs $of$ $$4,000,000$ yet $tobe$ incurred. Billings $of$

$$2,500,000$ were sent, and cash collected was $$2,250,000.$

$In2025,$ costs incurred were $$2,500,000$ with remaining costs estimated $tobe$ $$3,600,000.2025$ billings were $$2,750,000,$ and

$$2,475,000$ cash was collected. The project was completed $in2026$ after additional costs $of$ $$3,800,000$ 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 $tobe$ recognized $in$ each $of$ the three years.

$2a.$ Prepare journal entries for $2024to$ record the transactions described $(credit$ "Cash, Materials, etc." for construction costs incurred$).$

$2b.$ Prepare journal entries for $2025to$ record the transactions described $(credit$ "Cash, Materials, etc." for construction costs incurred$).$

$3a.$ Prepare a partial balance sheet $to$ show the presentation $of$ the project $asof$ December $31,2024.$

$3b.$ Prepare a partial balance sheet $to$ show the presentation $of$ the project $asof$ December $31,2025.$

Answer & Explanation Solved by verified expert

See Answer