On July 1. Wiggins Associates enters into a contract to provide consulting services to Pennsylvania University (PU). The contract isanticipated to lest four months and is intended to achieve significant cost savings at the university. The contract stipulates that PU willpay Wiggins $30O.000 at the end of each month, and, if total cost savings reach a specific target. PU will pay an additional $25,000 toWiggins at the end of the contract Wiggins estimates a 80% chance that cost savings will reach the targetAssume that Wiggins estimates uncertain consideration as the most likely amountRequired:Do the following for Wigginsa. Prepare the journal entry on July 31 to record the first month of revenue under the contract,b. Assuming totol cost savings exceed the target, prepare the journal entry, if ony, on October 31 to record recelpt of the $25,000bonus (ignoret the normol October payment of $30.000)c. Assuming total cost sovings do not reach the target, prepare the journal entry. if any. on October 31 to record failure to recoive the$25.000 bonus (ignore the nomal October payment of $30,000).(For all requirements, If no entry is required for a transaction/event, select "No journel entry required" in the first account field.)

Journal Entries Transaction Date Particular Debit Credit a July 31 Cash $30,000 Bonus…

On July 1. Wiggins Associetes enters into a contract to provide consulting services to Pennsylvenia University (PU). The contract is anticipated to lest four months and is intended to achieve significant cost savings at the university. The contract stipulates that PU wll pay Wiggins $30.000 at the end of each month, and, If total cost savings reach a specific target. PU will pay an additional $25,000 to Wiggins at the end of the contract Wiggins estimates a 80% chance that cost savings will reach the target Assume that Wi9gins estimates uncertain consideration as the most likely amount Required: Do the following for Wiggins e. Prepare the journal entry on July 31 to record the first month of revenue under the contract b. Assuming totol cost sevings exceed the target prepere the journal entry. if ony, on October 31 to record recelot of the $25.000 borus ignore the notmel October payment of S30.000) c. Assuming totel cost sovings do not reach the target, prepare the journal entry if any. on October 31 to record failure to receve the $25.000 bonus (ioniore the normat October payment of $30.000). (For all requirements, If no entry is required for e transaction/event, select "No journel entry required" in the first account fieid.)

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 13E: On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million....