Arizona Desert Homes (ADH) 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

ADH recognizes revenue over time with respect to these contracts.

For 2021, what is the journal entry to record revenue?

A)

Accounts receivable	1,500,000
Revenue from long-term contracts		1,500,000

B)

Construction in progress	400,000
Cost of construction	600,000
Revenue from long-term contracts		1,000,000

C)

Cost of construction	2,000,000
Gross profit	1,000,000
Revenue from long-term contracts		3,000,000

D)

Accounts receivable	1,500,000
Cost of construction		600,000
Gross profit		600,000
Deferred revenue		300,000

Select the letter below that corresponds to your selected solution above.

Group of answer choices

A

B

C

D