Mike Mincks is a building contractor. He and his customer have agreed that he will submit a bill to them when he is 25 percent complete, 50 percent complete, 75 percent complete, and 100 percent complete. For example, he has a $100,000 room addition. When he has completed 25 percent, he will bill his customer $25,000. The problem occurs when he is 40 percent complete, has incurred expenses but cannot yet bill his customer. How can his revenue and expenses match? Discuss in a group several ways that Mike’s accountant could solve this problem. What accounts would be used?
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