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6 On July 1, Wiggins Associates enters into a contract to provide consulting services to Pennsylvania University (PU). The contract is anticipated to last four months and is intended to achieve significant cost savings at the university. The contract stipulates that PU will pay Wiggins $39,000 at the end of each month, and, if total cost savings reach a specific target, PU will pay an additional $34,000 to Wiggins at the end of the contract. Wiggins estimates a 80% chance that cost savings will reach the target. Assume that Wiggins estimates uncertain consideration as the most likely amount. Required: Do the following for Wiggins: a. Prepare the journal entry on July 31 to record the first month of revenue under the contract. b. Assuming total cost savings exceed the target, prepare the journal entry, if any, on October 31 to record receipt of the $34,000 bonus (ignore the normal October payment of $39,000). c. Assuming total cost savings do not reach the target, prepare the journal entry, if any, on October 31 to record failure to receive the $34,000 bonus (ignore the normal October payment of $39,000). Note: For all requirements, If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

6 On July 1, Wiggins Associates enters into a contract to provide consulting services to Pennsylvania University (PU). The contract is anticipated to last four months and is intended to achieve significant cost savings at the university. The contract stipulates that PU will pay Wiggins $39,000 at the end of each month, and, if total cost savings reach a specific target, PU will pay an additional $34,000 to Wiggins at the end of the contract. Wiggins estimates a 80% chance that cost savings will reach the target. Assume that Wiggins estimates uncertain consideration as the most likely amount. Required: Do the following for Wiggins: a. Prepare the journal entry on July 31 to record the first month of revenue under the contract. b. Assuming total cost savings exceed the target, prepare the journal entry, if any, on October 31 to record receipt of the $34,000 bonus (ignore the normal October payment of $39,000). c. Assuming total cost savings do not reach the target, prepare the journal entry, if any, on October 31 to record failure to receive the $34,000 bonus (ignore the normal October payment of $39,000). Note: For all requirements, If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Journal entry worksheet 1 Record the first month of revenue under the contract. < Note: Enter debits before credits. Date July 31 Record entry 1 2 Journal entry worksheet Date October 31 3 2 Record entry Note: Enter debits before credits. Record the receipt of the $34,000 bonus. 3 Date October 31 General Journal Record entry Clear entry Note: Enter debits before credits. Journal entry worksheet 12 3 General Journal Record the failure to receive the $34,000 bonus. Clear entry General Journal Clear entry Debit Debit Debit Credit View general journal Credit View general journal Credit View general journal > > >
Transcribed Image Text:Journal entry worksheet 1 Record the first month of revenue under the contract. < Note: Enter debits before credits. Date July 31 Record entry 1 2 Journal entry worksheet Date October 31 3 2 Record entry Note: Enter debits before credits. Record the receipt of the $34,000 bonus. 3 Date October 31 General Journal Record entry Clear entry Note: Enter debits before credits. Journal entry worksheet 12 3 General Journal Record the failure to receive the $34,000 bonus. Clear entry General Journal Clear entry Debit Debit Debit Credit View general journal Credit View general journal Credit View general journal > > >
6 On July 1, Wiggins Associates enters into a contract to provide consulting services to Pennsylvania University (PU). The contract is anticipated to last four months and is intended to achieve significant cost savings at the university. The contract stipulates that PU will pay Wiggins $39,000 at the end of each month, and, if total cost savings reach a specific target, PU will pay an additional $34,000 to Wiggins at the end of the contract. Wiggins estimates a 80% chance that cost savings will reach the target. Assume that Wiggins estimates uncertain consideration as the most likely amount. Required: Do the following for Wiggins: a. Prepare the journal entry on July 31 to record the first month of revenue under the contract. b. Assuming total cost savings exceed the target, prepare the journal entry, if any, on October 31 to record receipt of the $34,000 bonus (ignore the normal October payment of $39,000). c. Assuming total cost savings do not reach the target, prepare the journal entry, if any, on October 31 to record failure to receive the $34,000 bonus (ignore the normal October payment of $39,000). Note: For all requirements, If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Transcribed Image Text:6 On July 1, Wiggins Associates enters into a contract to provide consulting services to Pennsylvania University (PU). The contract is anticipated to last four months and is intended to achieve significant cost savings at the university. The contract stipulates that PU will pay Wiggins $39,000 at the end of each month, and, if total cost savings reach a specific target, PU will pay an additional $34,000 to Wiggins at the end of the contract. Wiggins estimates a 80% chance that cost savings will reach the target. Assume that Wiggins estimates uncertain consideration as the most likely amount. Required: Do the following for Wiggins: a. Prepare the journal entry on July 31 to record the first month of revenue under the contract. b. Assuming total cost savings exceed the target, prepare the journal entry, if any, on October 31 to record receipt of the $34,000 bonus (ignore the normal October payment of $39,000). c. Assuming total cost savings do not reach the target, prepare the journal entry, if any, on October 31 to record failure to receive the $34,000 bonus (ignore the normal October payment of $39,000). Note: For all requirements, If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
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