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 receive the quarterly bonus. • On May 5, Portelli learned that, during March, there were two complaints from customers related to room cleanliness. Based on this new information, Portelli revised its estimate downward to 40% that it would be entitled to receive the quarterly bonus. • On June 30, Silvia notified Portelli that, for the quarter ended, there were four complaints associated with room cleanliness, so Portelli would receive the bonus. Two days later, Portelli received 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. Required: Prepare Portelli's May 31 journal entry to record the revenue recognized in May, as well as any appropriate adjustments to the revenue that had been recognized in April. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. No 1 2 Transaction 1 2 Accounts receivable Service revenue Bonus receivable Accounts receivable General Journal ✓ X X Debit 15,000✔ 1,050 x Credit 15,000 1,050 x
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 receive the quarterly bonus. • On May 5, Portelli learned that, during March, there were two complaints from customers related to room cleanliness. Based on this new information, Portelli revised its estimate downward to 40% that it would be entitled to receive the quarterly bonus. • On June 30, Silvia notified Portelli that, for the quarter ended, there were four complaints associated with room cleanliness, so Portelli would receive the bonus. Two days later, Portelli received 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. Required: Prepare Portelli's May 31 journal entry to record the revenue recognized in May, as well as any appropriate adjustments to the revenue that had been recognized in April. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. No 1 2 Transaction 1 2 Accounts receivable Service revenue Bonus receivable Accounts receivable General Journal ✓ X X Debit 15,000✔ 1,050 x Credit 15,000 1,050 x
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 receive the quarterly bonus.
On May 5, Portelli learned that, during March, there were two complaints from customers related to room cleanliness. Based on this
new information, Portelli revised its estimate downward to 40% that it would be entitled to receive the quarterly bonus.
On June 30, Silvia notified Portelli that, for the quarter ended, there were four complaints associated with room cleanliness, so
Portelli would receive the bonus. Two days later, Portelli received 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.
Required:
Prepare Portelli's May 31 journal entry to record the revenue recognized in May, as well as any appropriate adjustments to the revenue
that had been recognized in April.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
No
1
2
Transaction
1
2
Accounts receivable
Service revenue
Bonus receivable
Accounts receivable
General Journal
Debit
15,000
1,050
Credit
15,000
1,050
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