On February 1, 2018, Arrow Construction Company entered into a three-year constr

Question

On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,570,000. During 2018, costs of $2,190,000 were incurred with estimated costs of $4,190,000 yet to be incurred. Billings of $2,690,000 were sent, and cash collected was $2,440,000 In 2019, costs incurred were $2,690,000 with remaining costs estimated to be $3,885,000. 2019 billings were $2,940,000 and $2,665,000 cash was collected. The project was completed in 2020 after additional costs of $3,990,000 were incurred. The company's 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 2018, 2019, and 2020 using the percentage of completion method? 2a. Prepare journal entries for 2018 to record the transactions described (credit "various accounts" for construction costs incurred) 2b. Prepare journal entries for 2019 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, 2018 3b. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2019 Answer is not complete. Complete this question by entering your answers in the tabs below Req 1 Req 2A Req 2B Req 3A Req 3B Compute the amount of revenue and gross profit or loss to be recognized in 2018, 2019, and 2020 using the percentage of completion method? (Do not round intermediate calculations. Loss amounts should be indicated with a minus sign. Round your final answers to the nearest whole dollar.) Percentages of completion Choose denominator Estimated total costs Choose numerator+ % complete to date Actual costs to date $2,190,000$ 4.880.000S 6,380,000 8.765.000 2018 34.3260% 2019 55.6760%

Explanation / Answer

2019:-

To Date

Recognised in Prior years

Recognised in 2019

Construction Revenue

4770919

2941470

1829179

Construction Exp

4880000

2190000

2690000

Gross Profit

(109081)

751740

(860821)

2020:-

To Date

Recognised in Prior years

Recognised in 2020

Construction Revenue

8570000

4770919

3799081

Construction Exp

8870000

4880000

3990000

Gross Profit

(300000)

(109081)

(190919)

To Date

Recognised in Prior years

Recognised in 2019

Construction Revenue

4770919

2941470

1829179

Construction Exp

4880000

2190000

2690000

Gross Profit

(109081)

751740

(860821)

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