Whispering 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 $195,000 to be paid if the building is ready for rental beginning August 1, 2026. The bonus is reduced by $65,000 each week that completion is delayed. Whispering commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes.
August 1, 2026
70%
August 8, 2026
20
August 15, 2026
5
After August 15, 2026
5