XYZ signed a contract on 1 January 2011, agreeing to build a warehouse for ABC at a contract price of $40,000. Total expenses was $20,000. The cost for the first year was $15,000 whereas the payment for the first year was $10,000. Determine the expenses for the first year using accounting for construction contract method.

Select one:

a. $15,000

b. $10,000

c. $20,000

d. $40,000