Gupta Industries received a $240,000 prepayment from Packard Associates for the sale of new equipment. Gupta will bill Packard an additional $116,000 upon delivery of the equipment. Upon receipt of the $240,000 prepayment, how much should Gupta recognize for a contract asset, a contract liability, and accounts receivable?

Multiple Choice

Contract asset: $240,000; contract liability: $0, accounts receivable, $0.

Contract asset: $0; contract liability: $240,000, accounts receivable, $116,000.

Contract asset: $0; contract liability: $240,000, accounts receivable, $0.

Contract asset: $240,000; contract liability: $0, accounts receivable, $116,000.