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Sandhill Corp. enters into a contract with a customer to build an apartment building for...

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Accounting

Sandhill Corp. enters into a contract with a customer to build an apartment building for $1,045,500. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $139,800 to be paid if the building is ready for rental beginning August 1, 2021. The bonus is reduced by $46,600 each week that completion is delayed. Sandhill commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes:

Completed by Probability

August 1, 2021

 70 %

August 8, 2021

 20

August 15, 2021

 5

After August 15, 2021

 5

Determine the transaction price for this contract.

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