(TCO A) Tim Construction Co. began operations in 2016. Construction activity for 2016 is shown below. Tim uses the percentage of completion method.

Contract	Contract Price	Billings Through 12/31/16	Collections Through 12/31/16	Costs to 12/31/16	Estimated Costs to Complete
1	$5,200,000	$3,500,000	$2,600,000	$3,000,000	$1,000,000
2	$3,600,000	$1,500,000	$1,000,000	$820,000	$1,880,000
3	$3,300,000	$1,900,000	$1,800,000	$2,250,000	$1,200,000

Which of the following should be shown on the Balance Sheet on Dec 31, 2016 related to Contract 1?

$1,200,000 Inventory

$3,500,000 Current liability

$1,400,000 Inventory

$4,900,000 Current liability