Question

1. Probability weighted estimate Fitzgerald Construction Company enters into a contract with Merno Corp. to build...

1. Probability weighted estimate

Fitzgerald Construction Company enters into a contract with Merno Corp. to build a new manufacturing facility for $4,000,000. Merno hopes to use the facility as soon as possible and provides a performance bonus of $200,000 to be paid if the facility is ready for September 1, 2018. The bonus is reduced by $50,000 each week that completion is delayed. Fitzgerald has built many similar structures in the past and comes up with the following estimates

Completion Date                              Probability                         

September 1, 2018                             60%

September 8, 2018                             20%

September 15, 2018                           10%

After September 15, 2018                  10%

  1. Using the probability weighted estimate, calculate the transition price
  2. Using the most likely estimate, calculate the transaction price

2. Revenue with TVM

On January 1, 2018, Andover Inc. sells goods to Miller Company in exchange for a note with a face value of $14,000, with total payment due in once year. The fair value of the goods at the date of sale is $11,000. The cost to make the goods totaled $5,300. Prepare the journal entries to record this transaction on January 1, 2017.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #2

answered by: anonymous
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Sheridan Corp. enters into a contract with a customer to build an apartment building for $990,500....
Sheridan Corp. enters into a contract with a customer to build an apartment building for $990,500. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $147,300 to be paid if the building is ready for rental beginning August 1, 2018. The bonus is reduced by $49,100 each week that completion is delayed. Sheridan commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion...
Sarasota Corp. enters into a contract with a customer to build an apartment building for $1,045,500....
Sarasota 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. Sarasota commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion...
Marle Construction enters into a contract with a customer to build a warehouse for $950,000 on...
Marle Construction enters into a contract with a customer to build a warehouse for $950,000 on March 30, 2018 with a performance bonus of $50,000 if the building is completed by July 31, 2018. The bonus is reduced by $10,000 each week that completion is delayed. Marle commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by Probability July 31, 2018 65% August 7, 2018 25% August 14, 2018 5%...
Peabody Construction Company enters into a contract with a customer to build a warehouse for $950,000...
Peabody Construction Company enters into a contract with a customer to build a warehouse for $950,000 on March 30, 2018 with a performance bonus of $50,000 that will be paid based on the timing of completion (July 31, 2018). The amount of the performance bonus decreases by 10% per week for every week beyond the agreed-upon completion date. The contract requirements are similar to contracts that Peabody has performed previously, and management believes that such experience is predictive for this...
Mitchell corp enters into a contract with a customer to build an apartment building for 1,300,000....
Mitchell corp enters into a contract with a customer to build an apartment building for 1,300,000. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of 190,000 to be paid if the building is ready for rental beginning August 1, 2019. The bonus is reduced by 62,000 each week that completion of work is delayed. Klava commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the...
ESTIMATING VARIABLE CONSIDERATION AJD BUILDERS CONSTRUCTION COMPANY ENTERS INTO A CONTRACT WITH A CUSTOMER TO BUILD...
ESTIMATING VARIABLE CONSIDERATION AJD BUILDERS CONSTRUCTION COMPANY ENTERS INTO A CONTRACT WITH A CUSTOMER TO BUILD A 50 KILOMETERS ROAD TO P100,000,000 WITH A PERFORMANCE BONUS OF P60,000,000 THAT WILL BE PAID BASED ON THE TIMING OF COMPLETION. THE AMOUNT OF THE PERFORMANCE BONUS DECREASES BY 10% PER WEEK FOR EVERY WEEK BEYOND THE AGREED-UPON COMPLETION DATE. THE CONTRACT REQUIREMENTS ARE SIMILAR TO CONTRACTS THAT AJD BUILDERS HAS PERFORMED PREVIOUSLY, AND MANAGEMENT BELIEVES THAT SUCH EXPERIENCE IS PREDICTIVE FOR THIS...
On January 1, 2018, the Highlands Company began construction on a new manufacturing facility for its...
On January 1, 2018, the Highlands Company began construction on a new manufacturing facility for its own use. The building was completed in 2019. The company borrowed $2,050,000 at 11% on January 1 to help finance the construction. In addition to the construction loan, Highlands had the following debt outstanding throughout 2018: $6,000,000, 16% bonds $4,000,000, 11% long-term note Construction expenditures incurred during 2018 were as follows: January 1 $ 840,000 March 31 1,440,000 June 30 1,088,000 September 30 840,000...
Tamarisk Construction Company has entered into a contract beginning January 1, 2017, to build a parking...
Tamarisk Construction Company has entered into a contract beginning January 1, 2017, to build a parking complex. It has been estimated that the complex will cost $601,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $903,000. The following data pertain to the construction period. 2017 2018 2019 Costs to date $270,450 $492,820 $613,000 Estimated costs to complete 330,550 108,180 –0– Progress billings to date 273,000 550,000 903,000 Cash collected to date...
Question 36 ABC Company issues $10,000,000, 8%, 10-year bonds at 96.5 on July 1, 2019. Interest...
Question 36 ABC Company issues $10,000,000, 8%, 10-year bonds at 96.5 on July 1, 2019. Interest is paid on July 1 and January 1. The journal entry to record the issuance will include a debit to cash for $10,000,000 a credit to cash for $9,650,000 a credit to bonds payable for $9,650,000 a debit to discount on bonds payable for $350,000 Question 37 DEF Corporation retires its $100,000 face value bonds at 105 on January 1, following the payment of...
Will’s Widget Company (WWC) incorporated near the end of 2017. Operations began in January of 2018....
Will’s Widget Company (WWC) incorporated near the end of 2017. Operations began in January of 2018. WWC prepares adjusting entries and financial statements at the end of each month. Balances in the accounts at the end of January are as follows: Account Title Dr Cr Cash 21,170 Accounts Receivable 12,200 Allowance for Doubtful Accounts 1,750 Inventory (45 units) 3,825 Unearned Revenue (40 units) 5,200 Accounts Payable 3,000 Notes Payable 14,500 Contributed Capital 6,700 Retained Earnings - Feb 1, 2018 6,045...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT