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6 6. Alonzo Construction enters into a contract with a customer to build a warehouse for $600,000 on May 31, 2021 with a performance bonus
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6. Alonzo Construction enters into a contract with a customer to build a warehouse for $600,000 on May 31, 2021 with a performance bonus of $80,000 if the building is completed by August 31, 2021. The bonus is reduced by $20,000 each week that completion is delayed. Alonzo commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by August 31, 2021 September 7, 2021 September 14, 2021 Probability 70% 20% 10% The transaction price for this transaction is a. $672,000 b. $600,000 c. $476,000 d. $420,000 Step by Step Solution
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