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Prepare journal entries for 20 to record the transactions described (credit “various accounts” for construction costs incurred).3.

Calculate the amount of gross profit or loss to be recognized in each of the three years.2. This project does not qualify for revenue recognition over time.Required:1. The company’s fiscal year-end is December 31. The project was completed in 2020 after additional costs of $3,800,000 were incurred.

During 2018, costs of $2,000,000 were incurred, with estimated costs of $4,000,000 yet to be incurred. On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,000,000.