Blue Corp. enters into a contract with a customer to build an apartment building for $987,800. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $157,500 to be paid if the building is ready for rental beginning August 1, 2018. The bonus is reduced by $52,500 each week that completion is delayed.

Blue commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes:

Completed by Probability

August 1, 2018 70 %

August 8, 2018 20

August 15, 2018 6

After August 15, 2018 4

Determine the transaction price for this contract.

Transaction Price