Question

Client C Company agrees to pay Client the following incremental volume incentive based on annual Café and Catering Sales at all Locations under this Agreement: Annual Combined Net Café & Catering Sales Volume Incentive $8,000,000-$9,999,999 = 4.00% $10,000,000-$11,999,999 = 4.25% $12,000,000-$14,999,999 = 4.50% $15,000,000-$16,999,999 = 5.00% $17,000,000+ = 5.50% P&L Reporting From Period 1, 2015 To Period 12, 2015 Profit Center: Client C 9 Period TOTAL SALES NET PRODUCT COST TOTAL PERSONNEL COST TOTAL OTHER COSTS PROFIT (LOSS) YTD PROFITULOSS) 1.2015 1,732,040 1,187,541 1,133,232 2.2015 1,611,670 904,283 959,757 246,569 (498,939) |(1,385,265) 3.2015 1,858,902 953,846 982,787 270,103 (347,834) (1,733,099) 4,2015 5.2015 6, 2015 1,619,261 1.842,207 1,802,562 891,832 970,109 1 009,812 1.029,647 963,413 1.045,159 237,250 250,486 223,110 (539,468) (341,8011 (475,529) (2,272,567) (2,614,368) (3,089,897) 7.2015 2,207,373 1,096,504 1,123,650 291,457 (304,238) (3.394,135) 8.2015 2,024,065 1.008.839 1,001,210 284,196 (270,180) (3.664,315) ,2015 10,2015 11, 2015 1,881,086 2,047,443 1.530,778 982,144 1,069,752 890,088 956,945 1,075,766 908,111 300,564 304,549 249,987 (358,567) (402,624) (517,408) (4,022,882) (4,425,506) (4,942,914) 12, 2015 1,845,760 965,530 922,431 268,456 (310,657) (5,253,571) TOTAL 22,003,137 11,830,280 12,102,108 3.224,320 (5,253,571) (886,326) (886,326)

Answer 1

		SALES	CUML. SALES	Provision	Cuml. Provision
Jan-15		$1,732,040.00	$1,732,040.00	$0.00	$0.00
Feb-15		$1,611,670.00	$3,343,710.00	$0.00	$0.00
Mar-15		$1,858,902.00	$5,202,612.00	$0.00	$0.00
Apr-15		$1,619,261.00	$6,821,873.00	$0.00	$0.00
May-15		$1,842,207.00	$8,664,080.00	$26,563.20	$26,563.20
Jun-15		$1,802,552.00	$10,466,632.00	$99,831.86	$126,395.06	(79999.96+((10466632-9999999)*4.25%))
Jul-15		$2,207,373.00	$12,674,005.00	$195,330.15	$321,725.21	((79999.96+84999.96)+(12674005-12000000)*4.5%)
Aug-15		$2,024,065.00	$14,698,070.00	$286,413.07	$608,138.28	((79999.96+84999.96)+(14698070-12000000)*4.5%)
Slabs	Difference	Rate	Incentive
8000000-9999999	$1,999,999.00	4%	$      79,999.96
10000000-11999999	$1,999,999.00	4.25%	$      84,999.96
12000000-14999999	$2,999,999.00	4.50%	$    134,999.96
15000000-16999999	$1,999,999.00	5.00%	$      99,999.95
$17,000,000.00
Question 1
The company would not have any liability towards the client in the month of April
Question 2
Yes, the company would have the liability towards the client in the month of July.
For the month of July the Liability would be 195330.15$ and the total liability
upto the month of July would be $321,725.21
Journaly Entry Would be:-
		DEBIT	CREDIT
Incentive Expenses A/c		$195,330.15
Client A/c			$321,725.21
On the Liability side of the balance sheet the amount against the
Client Account would be 321725.21$ at the end of July Month

Thanking You

Hoping for a Positive Response