Oriole Construction is constructing an office building under contract for Cannon Company and uses the percentage-of-completion method. The contract calls for progress billings and payments of $1650000 each quarter. The total contract price is $18762000 and Oriole estimates total costs of $17900000. Oriole estimates that the building will take 3 years to complete, and commences construction on January 2, 2021. At December 31, 2022, Oriole Construction estimates that it is 75% complete with the building; however, the estimate of total costs to be incurred has risen to $18100000 due to unanticipated price increases. What is reported in the balance sheet at December 31, 2022 for Oriole as the difference between the Construction in Process and the Billings on Construction in Process accounts, and is it a debit or a credit?

Difference between the accounts

Debit/Credit

$871500

Credit

$4690500

Credit

$871500

Debit

$375000

Debit

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