Question

please complete it in this format.

On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,030,000. During 2021, costs of $2,010,000 were incurred with estimated costs of $4,010,000 yet to be incurred. Billings of $2,510,000 were sent, and cash collected was $2,260,000. In 2022, costs incurred were $2,510,000 with remaining costs estimated to be $3,615,000. 2022 billings were $2,760,000 and $2,485,000 cash was collected. The project was completed in 2023 after additional costs of $3,810,000 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 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). 2b. Prepare journal entries for 2022 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, 2021. 3b. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2022.

Answer 1

as on (a) for costs sncurred for project in the Yi project cost ak To Bank Alc DY 20,60,000 2010,000 165 for fecognising revenue as per pescartage completion basit ! (trom +1-6] 1. Revenue for project DY 26,81,113 2. Contract cost per av 45.20,000 6,71,113 40.10.000 Bank Al DY 55-56241. To Customer Alc 33 38811. 210): Jounal Entries in the books of Arrow conilcction company to Retained earnings ( 26.81,113 - 2010,000) Sol: As per IFRS-15, Revenue shall be recognised percentage completion 3(a): Partial Balancesheet of -how coniluction Co. for them 31/12/2001: basis, to the projects which are due to be completed in more than 20218 -ints (in $) Particulars One year. The given method is frized - price contacts. It is 45-4 coniluction contracts in case of Indian companies. -Assets; Financial - Assets 1: Catculation of tmount of Revenue W Gross profit 61 loss you 3 Yus:- 2,50.000 Bank -466 (29,60.000 - 20.10.000) 0,21,113 particulans Yv-1 (in) Yv-2 (in $) Yo-3 (in $) Customen - ne (26,81,113 - 22,60.000) (31/12/2011) (3111912023) (3111912023) 6,11,113 80 30,000 80,30,000 80 30,000 Total Assets Customer al 20 40.000 83 30.000 EQUITY: To constsuchion/ revenue afe- 26,81,113 cupto reporting date) 36,45.000 Project Reserves y sunplures : 3. Further contact costs to Incuy 8330000 (C) for receipt of money thom the customer : 81,35,000 4. Total Estimated contact cost 60 20.000 +3) 22,60,000 liabities 1001 22.60000 5. 'l. of complation ( 1100] 671,113 Total liabilities & Equity 6. 1o Of Revenue to be recopnised 80 30,000 2(6): Journal tilsies in the books of twow conšlauction company for 2022:- 3(6): Partial Balanceshact of -novow coniluuction co, as on 31/12/2009 : for each Reporting period 26,81,113 [0x] (cumulative) (a) fov Cosle oncuned for project during the Yv! Particulass Amirin ) Ame (in & 1.80,548 35,68 339 (2021) 1. Individual Year's Revenue 26,81,113 (44,61,661-26,80,113) (8030.00 - Project cost to Assel: 25.10.000 - 44,61,661) (Yv-2012 -Y-2013 for 22] 2,50 000 TO Bank Alc 2,25,000 25.10,000 Bank Alc (2,50.000 -25,10,000 +24,85.000) 8. Actual costs incurred in each 4,21,113 25,10,000 38,10,000 (2.83,339) (6) fox Recognising Revenue as per percentage completion basis (tram pq-o] Customes Apc (4,21,113 + 17,80,548-24,85.000) reportinp period (snuiduai] Given DY 17,80,548 Assets (58,339) 621,113 1. Gross profit/(10ss) for each (5.29,452) (2,41,661) 671,113 To project Revenue Alc Equity reporting period (@_@] 671,113 @ for receipt of money from the customer! Retoined Earnings As the billing of sales (Revenue) Amount differs from the devenue, as (6,91,113 +19,80,548 - 25,10,000) per percentage completion method, Restate the hills and pass necessary Liabilities Journal Entries, as the entity aequises -Aling under peacentape completion. (59339) Total läbilities q equity 6,71,113 CS Scanned with CamScanner CS Scanned with CamScanner 44,61,661 2022) Dr 20.10.000 Customer Alc 17.80,548 (58,339) 1 Di 24,85.000 Bank Ale To Customer at 24.85.000 CS Scanned with CamScanner