On January 1, Revis Consulting entered into a contract to complete a cost reduction program for...
On January 1, Revis Consulting entered into a contract to
complete a cost reduction program for Green Financial over a
six-month period. Revis will receive $32,000 from Green at the end
of each month. If total cost savings reach a specific target, Revis
will receive an additional $16,000 from Green at the end of the
contract, but if total cost savings fall short, Revis will refund
$16,000 to Green. Revis estimates an 80% chance that cost savings
will reach the target and calculates the contract price based on
the expected value of future payments to be received.
Required:
Prepare the following journal entries for Revis:
1. to 3. Prepare the journal entry on January 31
to record the collection of cash and recognition of the first
month’s revenue, assuming total cost savings exceed target, record
the entry on June 30 for receipt of the bonus and assuming total
cost savings fall short of target and record the entry on June 30
for payment of the penalty. (If no entry is
required for a transaction/event, select "No journal entry
required" in the first account field.)
| No | Transaction | General Journal | Debit | Credit |
|---|---|---|---|---|
| 1 | 1 | Cash | 32,000 | |
| Bonus receivable | ||||
| Service revenue | ||||
| 2 | 2 | Cash | 16,000 | |
| Bonus receivable | ||||
| Service revenue | ||||
| 3 | 3 | Service revenue | ||
| Bonus receivable | ||||
| Cash |
Homework Answers
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On January 1, Revis Consulting entered into a contract to
complete a cost reduction program for...
On January 1, Revis Consulting entered into a contract to complete a cost reduction program for...
On January 1, Revis Consulting entered into a contract to complete a cost reduction program for Green Financial over a six-month period. Revis will receive $68,000 from Green at the end of each month. If total cost savings reach a specific target, Revis will receive an additional $34,000 from Green at the end of the contract, but if total cost savings fall short, Revis will refund $34,000 to Green. Revis estimates an 80% chance that cost savings will reach the...
On January 1, Revis Consulting entered into a contract to complete a cost reduction program for...
On January 1, Revis Consulting entered into a contract to complete a cost reduction program for Green Financial over a six-month period. Revis will receive $22,400 from Green at the end of each month. If total cost savings reach a specific target, Revis will receive an additional $11,200 from Green at the end of the contract, but if total cost savings fall short, Revis will refund $11,200 to Green. Revis estimates an 80% chance that cost savings will reach the...
On January 1, Revis Consulting entered into a contract to complete a cost reduction program for...
On January 1, Revis Consulting entered into a contract to complete a cost reduction program for Green Financial over a six-month period. Revis will receive $36.800 from Green at the end of each month. If total cost savings reach a specific target, Revis will receive an additional $18.400 from Green at the end of the contract, but if total cost savings fall short, Revis will refund $18.400 to Green. Revis estimates an 80% chance that cost savings will reach the...
help On January 1, Revis Consulting entered into a contract to complete a cost reduction program...
help
On January 1, Revis Consulting entered into a contract to complete a cost reduction program for Green Financial over a six-month period. Revis will receive $44,000 from Green at the end of each month. If total cost savings reach a specific target, Revis will receive an additional $22,000 from Green at the end of the contract, but if total cost savings fall short, Revis will refund $22,000 to Green Revis estimates an 80% chance that cost savings will reach...
On January 1, Revis Consulting entered into a contract to complete a cost reduction program for...
On January 1, Revis Consulting entered into a contract to complete a cost reduction program for a client over a six-month period. Revis will receive $40,000 from the client at the end of each month. If total cost savings reach a specific target, Revis will receive an additional $40,000 bonus from the client at the end of the contract. However, if total cost savings fall short of the target, Revis must refund $40,000 to the customer. Revis estimates a 80%...
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Velocity, a consulting firm, enters into a contract to help Burger Boy, a fast-food restaurant, design...
Velocity, a consulting firm, enters into a contract to help
Burger Boy, a fast-food restaurant, design a marketing strategy to
compete with Burger King. The contract spans eight months. Burger
Boy promises to pay $63,000 at the end of each month. At the end of
the contract, Velocity either will give Burger Boy a refund of
$21,000 or will be entitled to an additional $21,000 bonus,
depending on whether sales at Burger Boy at year-end have increased
to a target...
Velocity, a consulting firm, enters into a contract to help Burger Boy, a fast-food restaurant, design...
Velocity, a consulting firm, enters into a contract to help Burger Boy, a fast-food restaurant, design a marketing strategy to compete with Burger King. The contract spans eight months. Burger Boy promises to pay $69,000 at the end of each month. At the end of the contract, Velocity either will give Burger Boy a refund of $23,000 or will be entitled to an additional $23,000 bonus, depending on whether sales at Burger Boy at year-end have increased to a target...
On January 1, Revis Consulting entered into a contract to complete a cost reduction program for Green Financial over a six-month period. Revis will receive $68,000 from Green at the end of each month. If total cost savings reach a specific target, Revis will receive an additional $34,000 from Green at the end of the contract, but if total cost savings fall short, Revis will refund $34,000 to Green. Revis estimates an 80% chance that cost savings will reach the...
On January 1, Revis Consulting entered into a contract to complete a cost reduction program for Green Financial over a six-month period. Revis will receive $36.800 from Green at the end of each month. If total cost savings reach a specific target, Revis will receive an additional $18.400 from Green at the end of the contract, but if total cost savings fall short, Revis will refund $18.400 to Green. Revis estimates an 80% chance that cost savings will reach the...
help
On January 1, Revis Consulting entered into a contract to complete a cost reduction program for Green Financial over a six-month period. Revis will receive $44,000 from Green at the end of each month. If total cost savings reach a specific target, Revis will receive an additional $22,000 from Green at the end of the contract, but if total cost savings fall short, Revis will refund $22,000 to Green Revis estimates an 80% chance that cost savings will reach...
Velocity, a consulting firm, enters into a contract to help Burger Boy, a fast-food restaurant, design a marketing strategy to compete with Burger King. The contract spans eight months. Burger Boy promises to pay $72,000 at the end of each month. At the end of the contract, Velocity either will give Burger Boy a refund of $24,000 or will be entitled to an additional $24,000 bonus, depending on whether sales at Burger Boy at year-end have increased to a target...
o Arrow Co. entered into a contract with a customer for $450,000. The contract is for the delivery of equipment and a 3-year service maintenance contract for the equipment. Arrow sells separately the equipment for a selling price of $428,000, and the maintenance contract for three years for $121,200. The equipment was delivered on 1 June 1 20X1. Arrow has a 30 November year-end. Required: Prepare the journal entries required to record the revenue related to this contract during the...
Velocity, a consulting firm, enters into a contract to help Burger Boy, a fast-food restaurant, design a marketing strategy to compete with Burger King. The contract spans eight months. Burger Boy promises to pay $81,000 at the end of each month. At the end of the contract, Velocity either will give Burger Boy a refund of $27,000 or will be entitled to an additional $27,000 bonus, depending on whether sales at Burger Boy at year-end have increased to a target...
Velocity, a consulting firm, enters into a contract to help
Burger Boy, a fast-food restaurant, design a marketing strategy to
compete with Burger King. The contract spans eight months. Burger
Boy promises to pay $63,000 at the end of each month. At the end of
the contract, Velocity either will give Burger Boy a refund of
$21,000 or will be entitled to an additional $21,000 bonus,
depending on whether sales at Burger Boy at year-end have increased
to a target...
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