Reference no: EM132462174

On Febmary 1, 2013, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $3,270,000.

• During 2013, costs of $2,090,000 were incurred with estimated costs of $4,090,000 yet to be incurred. Billings of $2,590,000 were sent, and cash collected was $2,340,000. In 2019, costs incurred were $2,590,000 with remaining costs estimated to be $3,735,000. 2019 billings were $2,340,000 and $2,565,000 cash was collected. The project was completed in 2020 a?er additional costs of $3,390,000 were incurred. The company's ?scal year-end is December 31.

Arrow recognizes revenue over time according to percentage of completion.

Required:

Question 1. Compute the amount of revenue and gross pro?t or loss to be recognized in 201 B, 2019, and 2020 using the percentage of completion method?

Question 2a. Prepare journal entries for 2013 to record the transactions described (credit "various accounts" for construction costs incurred).

Question 2b. Prepare journal entries for 201910 record the transactions described

Question 3a. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2013.

Question 3b. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2019. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req ZB Req 3A Req BB Prepare journal entries for 2019 to record the transactions described 

Revenue from long-term contracts

	Choose numerator	+	Choose denominator	=	% complete to date
	Actual costs to date		Estimated total costs
2018	2.090,000	+	$                         6.180,000	=	33.8188%
2019	4,680,000	I.	$                         8,415,000	=	55.6150%
2020					100.0000%

2018

	To date	Recognized in prior years		Recognized in 2018
Construction revenue	$                          2,796,812	$	0	$	2,796,812
Construction expense	$                       (2,090.000)	$	0	$	(2.090,000)
Gross profit (loss)	$                             706,812	$	0	$	706,812

2019

To date		Recognized in prior years		Recognized in 2019
Construction revenue	$                        4 599 358	S	2.796,812	$	1.802.546
Construction expense		S	2.090,000	$	(2,090,000)
Gross profit (loss)		$	706,817	$	(706,817)

2020

To date                                               Recognized in prior years Recognized in 2020

Construction revenue	$                   8.270.000	4.599.358	3,670.642
Construction expense	8,570,000		8,570,000
Gross profit (loss)	(300.000)		(300,000)