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Arizona Desert Homes (ADH) constructed a new subdivision during 2017 and 2018 under contract with Cactus Development Co. Relevant data are summarized below: Contract amount$3,090,000Cost:20171,220,0002018620,000Gross

Arizona Desert Homes (ADH) constructed a new subdivision during 2017 and 2018 under contract with Cactus Development Co. Relevant data are summarized below:

Contract amount$3,090,000Cost:20171,220,0002018620,000Gross profit:2017830,0002018420,000Contract billings:20171,545,00020181,545,000

ADH recognizes revenue upon completion of the contract.

What is the journal entry in 2018 to record revenue?

Multiple Choice

  • Cost of construction2,050,000Gross profit1,040,000Revenue from long-term contracts3,090,000
  • Accounts receivable1,545,000Revenue from long-term contracts1,545,000
  • Construction in progress1,250,000Cost of construction1,840,000Revenue from long-term contracts3,090,000
  • Construction in progress420,000Cost of construction620,000Revenue from long-term contracts1,040,000

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