Please list all of the journal entries for 2022 the ZARA UNIVERSITY Contract. Your company name is PP. See below information: On December 1, PP signed a contract with ZARA University to provide them with 905 scooters, at a price of $655 each. ZARA University chose not to purchase the additional maintenance service. Because PP had a great sales year, they did not have any scooters in stock on December 1. ZARA University offered a bonus plan for early delivery. They will pay a 4% bonus if all scooters are delivered by the end of January, 3% if all scooters are delivered by the end of February, and 2% if all scooters are delivered by the end of March. It believes that it is 45% likely that it can deliver the remaining scooters in January, 40% likely that it will deliver them in February, 10% likely that it will deliver them in March, and 5% likely it will deliver them in April. PP delivered and was paid for 195 scooters during the month of December. Hint: Consider using the “Estimated Bonus" account. The analysis of the first four steps in the revenue recognition process are below:

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Please list all of the journal entries for 2022 the ZARA
UNIVERSITY Contract. Your company name is PP. See below
information:
On December 1, PP signed a contract with ZARA University to
provide them with 905 scooters, at a price of $655 each. ZARA
University chose not to purchase the additional maintenance
service. Because PP had a great sales year, they did not have any
scooters in stock on December 1.
ZARA University offered a bonus plan for early delivery.
They will pay a 4% bonus if all scooters are delivered by the end
of January, 3% if all scooters are delivered by the end of February,
and 2% if all scooters are delivered by the end of March.
It believes that it is 45% likely that it can deliver the remaining
scooters in January, 40% likely that it will deliver them in
February, 10% likely that it will deliver them in March, and 5%
likely it will deliver them in April.
PP delivered and was paid for 195 scooters during the month of
December.
Hint: Consider using the “Estimated Bonus" account.
The analysis of the first four steps in the revenue recognition
process are below:
Transcribed Image Text:Please list all of the journal entries for 2022 the ZARA UNIVERSITY Contract. Your company name is PP. See below information: On December 1, PP signed a contract with ZARA University to provide them with 905 scooters, at a price of $655 each. ZARA University chose not to purchase the additional maintenance service. Because PP had a great sales year, they did not have any scooters in stock on December 1. ZARA University offered a bonus plan for early delivery. They will pay a 4% bonus if all scooters are delivered by the end of January, 3% if all scooters are delivered by the end of February, and 2% if all scooters are delivered by the end of March. It believes that it is 45% likely that it can deliver the remaining scooters in January, 40% likely that it will deliver them in February, 10% likely that it will deliver them in March, and 5% likely it will deliver them in April. PP delivered and was paid for 195 scooters during the month of December. Hint: Consider using the “Estimated Bonus" account. The analysis of the first four steps in the revenue recognition process are below:
ZARA University contract:
Contract Price:
Units
Price
Contract Price
St 1:
Step 2:
Step 3:
Delivery date
January
February
March
Later
Transaction Price (constrained)
Transaction Price per scooter
Estimated Bonus per scooter
905
655
592,775
Step 4:
Contract exists
Only 1 performance obligation
Determine the transaction price - variable consideration
Bonus
4%
3%
2%
0%
It is 55% likely that the revenue will be reversed, so it is constrained.
Consideration Probability
610,558
674.65
19.65
616,486
610,558
604,631
592,775
45%
40%
10%
5%
100%
Only 1 performance obligation, so no allocation
277,419
244,223
60,463
29,639
611,744
Transcribed Image Text:ZARA University contract: Contract Price: Units Price Contract Price St 1: Step 2: Step 3: Delivery date January February March Later Transaction Price (constrained) Transaction Price per scooter Estimated Bonus per scooter 905 655 592,775 Step 4: Contract exists Only 1 performance obligation Determine the transaction price - variable consideration Bonus 4% 3% 2% 0% It is 55% likely that the revenue will be reversed, so it is constrained. Consideration Probability 610,558 674.65 19.65 616,486 610,558 604,631 592,775 45% 40% 10% 5% 100% Only 1 performance obligation, so no allocation 277,419 244,223 60,463 29,639 611,744
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