Midterm Exam #1 - Sample Midterm Exam - Question #4: The following transactions occurred during 2018 and 2019 for Alair Homes Inc. (AHI) For each transaction prepare the applicable journal entry: 1) May 1, 2018 - AHI signed a contract with a client to sell them a home for $700,000. It will cost AHI $550,000 to build the home. AHI will build the home from Aug 1, 2018 till Nov 30, 2019. Construction time frames: Aug 1, 2018 to Dec 31, 2018 - 50% of the home will be built. Jan 1, 2019 to Nov 30, 2019 - 100% of the home will be built. 2) Jun 1, 2018 - Received a deposit of $300,000 from the customer. 3) Jun 10, 2018 - Purchased $200,000 of building materials to be used in the construction of the home. 4) Aug 1, 2018 - Commenced building the home. 5) Dec 31, 2018 - Completed 40% of the home (behind schedule due to weather). Any materials used above the $200,000 of inventory already owned were purchased with cash (hence it would go straight to COGS). 6) Jan 30, 2019 - Received $100,000 deposit from the customer. 7) Feb 1, 2019 - Purchased $100,000 of building materials to be used to construct the home. 8) Nov 30, 2019 - The construction of the home was 100% completed. 9) Dec 15, 2019 - Received $200,000 deposit from the customer. 10) Dec 31, 2019 - Received the final $100,000 deposit from the customer. Required: 1. Prepare the required journal entries. 2. Prepare the Dec 31, 2018 financial statements. 3. Prepare the Dec 31, 2019 financial statements.