ABZ constructed a new subdivision during 2020 and 2021 under contract with Cactus Development Co. Relevant data
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.
Fundamental Accounting Principles Volume I
ISBN: 978-1260305821
16th Canadian edition
Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann