Noah Construction Company is building a large complex for a contract price of $5,000,000. This is a three-year project and the requirements for recognizing revenue over time are met. The total estimated cost of the project is $4,000,000 and the following information is available:

($ in thousands)	Year 1				Year 2				Year 3
Costs incurred	$	1,000			$	1,500			$	1,250
Estimated completion costs	$	3,000			$	1,500			$	0
Billings	$	750			$	1,750			$	2,500
Cash collected	$	500			$	1,500			$	3,000

Using revenue recognition standards prior to ASC Topic 606, which one of the following entries would be made in Year 3 to record the completion and acceptance of the project using the completed-contract method of revenue recognition?

Multiple Choice

DR Inventory: Construction in progress $3,750,000 DR Income on long-term construction contract $1,250,000 CR Billings on construction in progress $5,000,000

DR Billings on construction in progress $1,250,000 CR Inventory: Construction in progress $1,250,000

DR Billings on construction in progress $5,000,000 CR Inventory: Construction in progress $3,750,000 CR Income on long-term construction contract $1,250,000

DR Inventory: Construction in progress $5,000,000 CR Billings on construction in progress $5,000,000