Question

Splish Brothers Inc., a registered broker, enters into a finder's fee agreement with HOM Homes Ltd. on June 15, 2020. Splish Brothers will find leads in the form of buyers potentially interested in purchasing HOM's real estate holdings. Along with finding potential buyers, Splish Brothers helps negotiate the selling price and provides advice on contract details. If and when HOM closes a sale, Splish Brothers will be paid within 30 days of the closing date, based on the following formula: 5% of any transaction value up to and including $1 million, plus 4% of any transaction value greater than $1 million and less than and including $2 million, plus 3% of any transaction value greater than $2 million and less than and including $3 million, plus 2% of any transaction value greater than $3 million and less than and including $4 million, plus 1% of any transaction value in excess of $4 million. If Splish Brothers is represented by another broker and this information is not shared with HOM, the fee is reduced by 50%. On September 1, 2020, HOM paid Splish Brothers $52,000 to provide some needed cash flow for seeking out buyers. On October 15, 2020, an offer was made and accepted for a parcel of real estate at a price of $3.35 million. The transaction closed on November 1, 2020, and Splish Brothers was paid the finder's fee net of $52,000 on November 30, 2020. Determine the accounting treatment of the above events for Splish Brothers Inc. and prepare any journal entries needed on: (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) a. June 15, 2020 b. September 1, 2020 C. October 15, 2020 d. November 1, 2020 e. November 30, 2020 Date Account Titles and Explanation Debit Credit a. e.

Answer 1

Answer Page No 0 Tournal eatuice @ on June 15, 20:30 No entary is recorded for entering into agreement on September 1, 2030 Bank accoont debit = $ 52000 © On October 15, 2020 No jowrnal erlay for offer and acceptance. Journal entry on actual transaction. @ On November 1, 2000 As the money goes to & the real estate belongs to HIOM homes lbd, no jownal en biny Po the beskio of Marin ine- © On November 30, 20 20 Brokerage - (54, X 1,000,000) + (47.(20.600 100,00)] + [36 x [2000,000 – 2000,000)] + [ 24. X(3350,000 -- 3000,000)]

Page. No @ = 50,000 + 40,000 + 30,000 + 7000 = $197000 .: Brokerage account - $124000 Bank account = 124000 – 52000 = $ 75000 SINO Date Account title Debit a: June 15, No journal entry is recorded 6. September 1, Bank al $ 52000 2020 Advance from Hom hemes Itd $52000 Credit October 15, 200 No journal entry is recorded November 1, 2020 " No journal entry is recorded e November 30, Advance from from homes Itd $52000 ೩೦೩ರಿ Banki alc. . $ 75000 Brokerage account $ 197000