Noah Construction Company is building a large complex for a contract price of $$5,000,000.$ This is a three$-$year project and the requirements for recognizing revenue over time are met. The total estimated cost of the project is $$4,000,000$ and the following information is available:

$$

$($$ in thousands$)$Year $1$Year $2$Year $3$Costs incurred$$1,000$$$1,500$$$1,250$Estimated completion costs$$3,000$$$1,500$$$0$Billings$$750$$$1,750$$$2,500$Cash collected$$500$$$1,500$$$3,000$

$$

Assuming that the conditions for revenue recognition over time were not met, which of the following entries would be made in Year $3$ to record the completion and acceptance of the project?

Multiple Choice

DR Billings $$1,250,000$ CR Inventory: Construction in progress $$1,250,000$

DR Inventory: Construction in progress $$3,750,000$ DR Income on long$-$term construction contract $$1,250,000$ CR Billings $$5,000,000$

DR Inventory: Construction in progress $$5,000,000$ CR Billings $$5,000,000$

DR Billings $$5,000,000$ CR Inventory: Construction in progress $$3,750,000$ CR Income on long$-$term construction contract $$1,250,000$