Question

This fact pattern provides information needed to answer Q#10 through Q#16. On August 1, Year 1, Hoppy Company agreed to provide consulting service to a large client over a 24-month period. It was agreed that these services would be provided in equal monthly amounts starting on August 1, Year 1. These services were provided as agreed. The aggregate value of all services under this contract was $480,000. In Year 1, Hoppy received $110,000 from this large client. Also in Year 1, Hoppy contracted with a smaller client to provide $24,000 in consulting services during each month for 30 months starting on November 1, Year 1. These services were provided as agreed. The smaller client advanced (paid) Hoppy $30,000 when the contract was signed on November 1, Year 1. In Year 2, both clients received services as required by their contracts. The large client paid Hoppy $300,000 cash in Year 2. The smaller client paid Hoppy $230,000 in Year 2. Click Save and Submit to save and submit. Click Save All Answers to save all answers. Save All A 115 80 888 u 14 ** * 3 $ 4 % 5 & 7 8 E R. T Y U o D F H J к C V B N M.

15

all th info needed is in the pictures sent

use first two photos to answer #15 please. thank you

use first 2 photos to answer #15 please

Answer 1

Assuming calendar year is followed i.e. year starts on 1st January and ends on 31st December

For Large Client,

Agreed amount per month = Total agreed amount for entire contract period/ Number of months of contract

= $480,000/24

= $20,000

1) Amount to be received in 1st Year ( August to December) = 5 months x $ 20000 per month

= $ 100,000

Amount received = $ 110,000

Since amount received is more than amount to be received, there is an advance payment made by the client.

Advance amount received for year 1= $110,000 - $100,000

= $10000 ----------- (A)

2 ) Amount to be received in 2nd Year ( January to December) = 12 months x $ 20000 per month

= $240,000

Amount received = $ 300,000

Since amount received is more than amount to be received, there is an advance payment made by the client.

Advance amount received for year 2 = $300,000 - $240,000

= $60000 ----------- (B)

Total Advance amount at the end of Year 2= (A) + (B)

= $10,000 + $60,000

= $70,000

For Small client,

1) Amount to be received in 1st Year ( November to December) = 2 months x $ 24000 per month

= $ 48,000

Amount received = $ 30,000

Amount due to be received for Year 1= $ 48,000-$30,000

= $ 18,000 -----------------(C)

2)

Amount to be received in 2nd Year ( January to December) = 12 months x $ 24000 per month

= $288,000

Amount received = $ 230,000

Amount due to be received for Year 2 = $288,000 - $230,000

= $58,000 ----------(D)

Total amount due at the end of Year 2 =   (C) + (D)

= $ 18,000+$58,000

= $ 76,000

Hence Accounts Receivable at the end of year 2 would be $76000.