Question

Rocky Guide Service provides guided 1-5 day hiking tours throughout the Rocky Mountains. Wilderness Tours hires Rocky to lead various tours that Wilderness sells. Rocky receives $3,000 per tour day, and shortly after the end of each month Rocky learns whether it will receive a $300 bonus per tour day it guided during the previous month if its service during that month received an average evaluation of "excellent" by Wilderness customers. The $3,000 per day and any bonus due are paid in one lump payment shortly after the end of each month. points . On July 1, based on prior experience, Rocky estimated there is a 30% chance it will earn the bonus for July tours. It guided a total of 10 days from July 1–July 15. • On July 16, based on Rocky's view that it had provided excellent service during the first part of the month, Rocky revised its estimate to an 80% chance it would earn the bonus for July tours. Rocky also guided customers for 15 days from July 16-July 31. • On August 5 Rocky learned it did not receive an average evaluation of "excellent" for its July tours, so it would not receive any bonus for July, and received all payment due for the July tours. Rocky bases estimates of variable consideration on the expected value it expects to receive. Required: 1. to 3. Prepare the journal entries to record the transactions above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Answer is not complete. No General Journal Credit Date July 15 Debit 30,000 Accounts receivable July 31 Accounts receivable Bonus receivable Service revenue 45,000 7,500 52,500 August 05 75,000 Cash Accounts receivable 75,000 4 August 05 7,500 X Service revenue Bonus receivable 7,500

Answer 1

No	Date	General Journal	Debit	Credit
1	1-Jul	No Journal entry required for the estimation of 30% chance of earning bonus
2	15-Jul	Accounts Receivable	30000
		Service Revenue		30000
3	16-Jul	No Journal entry required for the estimation of 80% chance of earning bonus for July tours.
4	31-Jul	Accounts Receivable	45000
		Service Revenue		45000
5	5-Aug	No Journal entry required for Rocky learning that he did not receive an average evaluation of "excellent" for his July tours.
6	5-Aug	Cash	75000
		Accounts Receivable		75000