Homework Help is Here – Start Your Trial Now!
Business
Accounting
Portelli Services provides room-cleaning arrangements for hotels in Pennsylvania. On April 1, Silvia Hotels & Resorts signed an agreement to outsource its room-cleaning functions to Portelli. The contract specifies the service fee to be $15,000 per month, and all payments are to be made shortly after the end of each quarter. It also specifies that Portelli will receive an additional quarterly bonus of $3,000 if, during that quarter, Silvia receives no more than five complaints from customers about room cleanliness. . . . On April 1, based on historical experience, Portelli estimated that there is a 75% chance that it will earn the quarterly bonus. On May 5, Portelli learned that, during March, there were two complaints from customers rel ated to room cleanliness. Based on this new information, Portelli revised its estimate downw ard to 40% that it would earn the quarterly bonus. On June 30, Silvia notified Portelli that, for the quarter ended, there were four complaints ass ociated with room cleanliness, so Portelli would receive the bonus. Two days later, Portelli re ceived all payments due for all services rendered in the second quarter, including the bonus.

Portelli Services provides room-cleaning arrangements for hotels in Pennsylvania. On April 1, Silvia Hotels & Resorts signed an agreement to outsource its room-cleaning functions to Portelli. The contract specifies the service fee to be $15,000 per month, and all payments are to be made shortly after the end of each quarter. It also specifies that Portelli will receive an additional quarterly bonus of $3,000 if, during that quarter, Silvia receives no more than five complaints from customers about room cleanliness. . . . On April 1, based on historical experience, Portelli estimated that there is a 75% chance that it will earn the quarterly bonus. On May 5, Portelli learned that, during March, there were two complaints from customers rel ated to room cleanliness. Based on this new information, Portelli revised its estimate downw ard to 40% that it would earn the quarterly bonus. On June 30, Silvia notified Portelli that, for the quarter ended, there were four complaints ass ociated with room cleanliness, so Portelli would receive the bonus. Two days later, Portelli re ceived all payments due for all services rendered in the second quarter, including the bonus.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Please do not give solution in image format ? And Fast Answering Please ? And Explain Proper Step by Step.

Portelli Services provides room-cleaning arrangements for hotels in Pennsylvania. On April 1, Silvia Hotels & Resorts signed an agreement to outsource its room-cleaning functions to Portelli. The contract specifies the service fee to be $15,000 per month, and all payments are to be made shortly after the end of each quarter. It also specifies that Portelli will receive an additional quarterly bonus of $3,000 if, during that quarter, Silvia receives no more than five complaints from customers about room cleanliness. . . On April 1, based on historical experience, Portelli estimated that there is a 75% chance that it will earn the quarterly bonus. On May 5, Portelli learned that, during March, there were two complaints from customers rel ated to room cleanliness. Based on this new information, Portelli revised its estimate downw ard to 40% that it would earn the quarterly bonus. On June 30, Silvia notified Portelli that, for the quarter ended, there were four complaints ass ociated with room cleanliness, so Portelli would receive the bonus. Two days later, Portelli re ceived all payments due for all services rendered in the second quarter, including the bonus. Portelli bases estimates of variable consideration on the most likely amount it expects to receive. Prepare Portelli's April 30 journal entry to account for the revenue earned in April. Prepare Portelli's May 31 journal entry to record the revenue earned in May, as well as any appropriate adjustments to the revenue earned in April. Prepare Portelli's June 30 and July 2 journal entries to record additional service revenue earned, as well as any necessary adjustments to revenue and receipt of payment from Silvia.
Transcribed Image Text:Portelli Services provides room-cleaning arrangements for hotels in Pennsylvania. On April 1, Silvia Hotels & Resorts signed an agreement to outsource its room-cleaning functions to Portelli. The contract specifies the service fee to be $15,000 per month, and all payments are to be made shortly after the end of each quarter. It also specifies that Portelli will receive an additional quarterly bonus of $3,000 if, during that quarter, Silvia receives no more than five complaints from customers about room cleanliness. . . On April 1, based on historical experience, Portelli estimated that there is a 75% chance that it will earn the quarterly bonus. On May 5, Portelli learned that, during March, there were two complaints from customers rel ated to room cleanliness. Based on this new information, Portelli revised its estimate downw ard to 40% that it would earn the quarterly bonus. On June 30, Silvia notified Portelli that, for the quarter ended, there were four complaints ass ociated with room cleanliness, so Portelli would receive the bonus. Two days later, Portelli re ceived all payments due for all services rendered in the second quarter, including the bonus. Portelli bases estimates of variable consideration on the most likely amount it expects to receive. Prepare Portelli's April 30 journal entry to account for the revenue earned in April. Prepare Portelli's May 31 journal entry to record the revenue earned in May, as well as any appropriate adjustments to the revenue earned in April. Prepare Portelli's June 30 and July 2 journal entries to record additional service revenue earned, as well as any necessary adjustments to revenue and receipt of payment from Silvia.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps with 2 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Cost management
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS