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On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,360,000. During 2018, costs of $2,120,000 were incurred with estimated costs of $4,120,000 yet to be incurred. Billings of $2,620,000 were sent, and cash collected was $2,370,000.

In 2019, costs incurred were $2,620,000 with remaining costs estimated to be $3,780,000. 2019 billings were $2,870,000 and $2,595,000 cash was collected. The project was completed in 2020 after additional costs of $3,920,000 were incurred. The company’s fiscal year-end is December 31. Arrow recognizes revenue over time according to percentage of completion.

Required:
1. Prepare journal entries to recognize revenue for 2018, 2019 and 2020.

Sagot :

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