Question

Since 1970, Super Rise, Inc., has provided maintenance services for elevators. On January 1, 2021, Super Rise obtains a contract to maintain an elevator in a 90-story building in New York City for 10 months and receives a fixed payment of $85,000. The contract specifies that Super Rise will receive an additional $42,500 at the end of the 10 months if there is no unexpected delay, stoppage, or accident during the year. Super Rise estimates variable consideration to be the most likely amount it will receive. points 8 02:49:52 Skipped Required: 1. Assume that, because the building sees a constant flux of people throughout the day, Super Rise is allowed to access the elevators and related mechanical equipment only between 3 a.m. and 5 a.m. on any given day, which is insufficient to perform some of the more time-consuming repair work. As a result, Super Rise believes that unexpected delays are likely and that it will not earn the bonus. Prepare the journal entry Super Rise would record on January 1. 2. Assume instead that Super Rise knows at the inception of the contract that it will be given unlimited access to the elevators and related equipment each day, with the right to schedule repair sessions any time. When given these terms and conditions, Super Rise has never had any delays or accidents in the past. Prepare the journal entry Super Rise would record on January 31 to record one month of revenue. 3. Assume the same facts as requirement 1. In addition assume that, on May 31, Super Rise determines that it does not need to spend more than two hours on any given day to operate the elevator safely because the client's elevator is relatively new. Therefore, Super Rise believes that unexpected delays are very unlikely. Prepare the journal entry Super Rise would record on May 31 to recognize May revenue and any necessary revision in its estimated bonus receivable. eBook Print Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Assume that, because the building sees a constant flux of people throughout the day, Super Rise is allowed to access the elevators and related mechanical equipment only between 3 a.m. and 5 a.m. on any given day, which is insufficient to perform some of the more time- consuming repair work. As a result, Super Rise believes that unexpected delays are likely and that it will not earn the bonus. Prepare the journal entry Super Rise would record on January 1. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Show less

Answer 1

Answert 0 Journal entry super vise would record on Jany. Date T pasliculars bebit wl Cash Ale $85.000 10 De ferved Revenue credit 2001 Заи- DY $85,000 In the above, Super rise belives that it will mob earn $42,500 bonus. It is not incluided in transaction price. Then the de ferred revenue is $85,000. * Deferred gevencie - Transaction amount /na of months. - $85,000/10 Months .. Deferred revenue - $ 8,500 Bonus receivable - $42,500 lo montte = $4850. particulars LE Debit credit Deferred Revenue Ale or $8.500 Bonusgevenue Ale $ 4,250 TO Service Revenue $12,750 6 No. of oronths Completed - 5 months (Jane to May-31) Net bonus receivable. Bonus receivable . No. of months * No. of Months compleled ={$4250% 345 Date i. Nel bonus receivable = $21,250. Date Credit particulars Deferred Revenue Ale Bonues revenue Ale or or EF Debit $ 8,500 #21,250 To Service Revenue $29,750