Philly Style Builders accepts a contract with Steven Starr Restaurants to construct a sports bar on January 1, 2021. The builder accepts a fixed fee of $10,000,000 and must complete the project within three years. Costs incurred, estimated total costs, billings, and cash collections are summarized in the following table:

	2021	2022	2023	TOTAL
Actual construction costs incurred during the year	2,000,000	6,500,000	1,000,000	9,500,000
Estimated costs to complete the project	7,200,000	500,000
Progress billings made during the year.	4,000,000	3,000,000	3,000,000	10,000,000
Cash collected during the year	3,100,000	4,000,000	2,900,000	10,000,000

Assume arrangement meets the criteria for recognizing revenue over time, and Philly Style Builders uses the percentage-of-completion method of accounting.

20. In the second year, what journal entry could Philly Style make to record the actual construction costs incurred during the year?

Group of answer choices

A. Debit Construction in Progress 6,500,000 / Credit Cash 6,500,000

B. Debit Cash 6,500,000 / Credit Construction in Progress 6,500,000

C. Debit Construction Costs 6,500,000 / credit Revenue on Long-term Contract 6,500,000

D. Debit billings on Constructions in Progress 6,500,000 / credit Construction in Progress 6,500,000

20. Assume Philly Style estimates it will complete 10% of the project in year 1, based on total square feet of the sports bar. To record revenue at the end of year 1, Philly style will credit:

Group of answer choices

A. Revenue on Long Term Contract 1,000,000

B. Deferred Revenue 9,000,000

C. Revenue on Long Term Contract 9,000,0000

D. Construction in Progess 1,000,000