Arizona Desert Homes (ADH) constructed a new subdivision during 2020 and 2021 under contract with Cactus Development Co. Relevant data are summarized below:Contract amount $2,775,000? Cost:2020 1,150,000? 2021 550,000? Gross profit:2020 725,000? 2021 350,000? Contract billings:2020 1,387,500? 2021 1,387,500? ADH recognizes revenue upon completion of the contract. What is the journal entry in 2021 to record revenue?
A.
| Construction in progress | 1,075,000? | |
| Cost of construction | 1,700,000? | |
| Revenue from long-term contracts | 2,775,000? |
B.
| Cost of construction | 1,875,000? | |
| Gross profit | 900,000? | |
| Revenue from long-term contracts | 2,775,000? |
C.
| Accounts receivable | 1,387,500? | |
| Revenue from long-term contracts | 1,387,500? |
D.
| Construction in progress | 350,000? | |
| Cost of construction | 550,000? | |
| Revenue from long-term contracts | 900,000? |
Answer: A
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