Question

ABZ constructed a new subdivision during 2020 and 2021 under contract with Cactus Development Co. Relevant data are summarized below:

Contract amount		$	3,000,000
Cost:	2020		1,200,000
	2021		600,000
Gross profit:	2020		800,000
	2021		400,000
Contract billings:	2020		1,500,000
	2021		1,500,000

ABZ recognizes revenue upon completion of the contract.

For 2020, what is the journal entry to record revenue?

A)

Accounts receivable	1,500,000
Revenue from long-term contracts		1,500,000

B)

Accounts receivable	2,300,000
Gross profit		800,000
Revenue from long-term contracts		1,500,000

C)

Construction in progress	800,000
Cost of construction	1,200,000
Revenue from long-term contracts		2,000,000

D) No entry.

Answer 1