Measure, mark, and cut the 1x2 boards to length. Using a router fitted with a 3/8-inch rabbet bit, route a rabbet on the interior edge of the four boards. You'll route the rabbet the entire length of the board for the rails, but you'll need to stop short on the stiles.
Drill 3/4-inch pocket holes into the rails and attach to stiles with 1 1/4-inch pocket screws.
Alternately, you may choose to construct the frame first and then cut the rabbet along the interior edge of the constructed frame.