Velocity, a consulting firm, enters into a contract to help Burger Boy, a fast-food restaurant, design a marketing strategy to compete with Burger King. The contract spans eight months. Burger Boy promises to pay $66,000 at the end of each month. At the end of the contract, Velocity either will give Burger Boy a refund of $22,000 or will be entitled to an additional $22,000 bonus, depending on whether sales at Burger Boy at year-end have increased to a target level. At the inception of the contract, Velocity estimates an 80% chance that it will earn the $22,000 bonus and calculates the contract price based on the expected value of future payments to be received. At the start of the fifth month, circumstances change, and Velocity revises to 60% its estimate of the probability that it will earn the bonus. At the end of the contract, Velocity receives the additional consideration of $22,000. Required: 1. to 4. Prepare the journal entries related to the contract. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 4 Record the entry to record revenue each month for the first four months of the contract.

Velocity, a consulting firm, enters into a contract to help Burger Boy, a fast-food restaurant, design a marketing strategy to compete with Burger King. The contract spans eight months. Burger Boy promises to pay $66,000 at the end of each month. At the end of the contract, Velocity either will give Burger Boy a refund of $22,000 or will be entitled to an additional $22,000 bonus, depending on whether sales at Burger Boy at year-end have increased to a target level. At the inception of the contract, Velocity estimates an 80% chance that it will earn the $22,000 bonus and calculates the contract price based on the expected value of future payments to be received. At the start of the fifth month, circumstances change, and Velocity revises to 60% its estimate of the probability that it will earn the bonus. At the end of the contract, Velocity receives the additional consideration of $22,000. Required: 1. to 4. Prepare the journal entries related to the contract. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 4 Record the entry to record revenue each month for the first four months of the contract.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

Problem 6E: Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of...

See similar textbooks

Similar questions

Velocity, a consulting firm, enters into a contract to help Burger Boy, a fast-food restaurant, design a marketingstrategy to compete with Burger King. The contract spans eight months. Burger Boy promises to pay $60,000at the beginning of each month. At the end of the contract, Velocity either will give Burger Boy a refund of$20,000 or will be entitled to an additional $20,000 bonus, depending on whether sales at Burger Boy at yearend have increased to a target level. At the inception of the contract, Velocity estimates an 80% chance that itwill earn the $20,000 bonus and calculates the contract price based on the expected value of future paymentsto be received. After four months, circumstances change, and Velocity revises to 60% its estimate of the probability that it will earn the bonus. At the end of the contract, Velocity receives the additional consideration of$20,000.Required:1. Prepare the journal entry to record revenue each month for the first four months of the contract.2.…
Velocity, a consulting firm, enters into a contract to help Burger Boy, a fast-food restaurant, design a marketing strategy to compete with Burger King. The contract spans eight months. Burger Boy promises to pay $57,000 at the end of each month. At the end of the contract, Velocity either will give Burger Boy a refund of $19,000 or will be entitled to an additional $19,000 bonus, depending on whether sales at Burger Boy at year-end have increased to a target level. At the inception of the contract, Velocity estimates an 80% chance that it will earn the $19,000 bonus and calculates the contract price based on the expected value of future payments to be received. At the start of the fifth month, circumstances change, and Velocity revises to 60% its estimate of the probability that it will earn the bonus. At the end of the contract, Velocity receives the additional consideration of $19,000. Record the entry to record revenue each month for the first four months of the contract…
Velocity, a consulting firm, enters into a contract to help Burger Boy, a fast-food restaurant, design a marketing strategy to compete with Burger King. The contract spans eight months. Burger Boy promises to pay $96,000 at the end of each month. At the end of the contract, Velocity either will give Burger Boy a refund of $32,000 or will be entitled to an additional $32,000 bonus, depending on whether sales at Burger Boy at year-end have increased to a target level. At the inception of the contract, Velocity estimates an 80% chance that it will earn the $32,000 bonus and calculates the contract price based on the expected value of future payments to be received. At the start of the fifth month, circumstances change, and Velocity revises to 60% its estimate of the probability that it will earn the bonus. At the end of the contract, Velocity receives the additional consideration of $32,000. Required: 1. Prepare the journal entry to record revenue at the end of each month for the first…
Velocity, a consulting firm, enters into a contract to help Burger Boy, a fast-food restaurant, design a marketing strategy to compete with Burger King. The contract spans eight months. Burger Boy promises to pay $93,000 at the end of each month. At the end of the contract, Velocity either will give Burger Boy a refund of $31,000 or will be entitled to an additional $31,000 bonus, depending on whether sales at Burger Boy at year-end have increased to a target level. At the inception of the contract, Velocity estimates an 80% chance that it will earn the $31,000 bonus and calculates the contract price based on the expected value of future payments to be received. At the start of the fifth month, circumstances change, and Velocity revises to 60% its estimate of the probability that it will earn the bonus. At the end of the contract, Velocity receives the additional consideration of $31,000. how to figure out the bonus receivable pays after the fifth month? also the bonus on the fifth…
Velocity, a consulting firm, enters into a contract to help Burger Boy, a fast-food restaurant, design a marketing strategy to compete with Burger King. The contract spans eight months. Burger Boy promises to pay $54,000 at the end of each month. At the end of the contract, Velocity either will give Burger Boy a refund of $18,000 or will be entitled to an additional $18,000 bonus, depending on whether sales at Burger Boy at year-end have increased to a target level. At the inception of the contract, Velocity estimates an 80% chance that it will earn the $18,000 bonus and calculates the contract price based on the expected value of future payments to be received. At the start of the fifth month, circumstances change, and Velocity revises to 60% its estimate of the probability that it will earn the bonus. At the end of the contract, Velocity receives the additional consideration of $18,000. Required: 1. Prepare the journal entry to record revenue at the end of each month for the first…
Velocity, a consulting firm, enters into a contract to help Burger Boy, a fast-food restaurant, design a marketing strategy to compete with Burger King. The contract spans eight months. Burger Boy promises to pay $66,000 at the end of each month. At the end of the contract. Velocity either will give Burger Boy a refund of $22,000 or will be entitled to an additional $22,000 bonus, depending on whether sales at Burger Boy at year-end have increased to a target level. At the inception of the contract, Velocity estimates an 80% chance that it will earn the $22,000 bonus and calculates the contract price based on the expected value of future payments to be received. At the start of the fifth month, circumstances change, and Velocity revises to 60% its estimate of the probability that it will earn the bonus. At the end of the contract. Velocity receives the additional consideration of $22,000 Required: 1. Prepare the journal entry to record revenue at the end of each month for the first…
ss
A consulting firm enters into a contract to help a small family owned business design a marketing strategy to compete with other companies in the region. THe contract spans 8 months. Baker's client promises to pay $93,000 at the begining of each month. At the end of the contract, Baker either will give their client a refund of $31,000 or will be entitled to an additonal $31,000 bonus, depending on whether sales at Burger boy at year end have increased to a target level. At the inception of the contract, Baker estimated an 80% chance that it will earn the $31,000 bonus and calculates the contract price based on the expected value of future payments to be received. At the end of the contract, Baker received the additional consideration of $31,000.00 #1. Prepare journal entry to record revenue for the first four month of the contract. #2. Prepare the journal entry that "Baker would record after 8 months to record the receipt of the $31,000 bonus. For #1 I'm not sure if I use…
Jonas Consulting enters into a contract to provide cost management consulting services over a 1-year period for $10,000 per month. At the end of the contract, Jonas will either give the customer a $24,000 refund or be entitled to an additional $24,000, depending on the level of cost savings. The company believes there is an 80% chance that it will be entitled to an additional $24,000 and a 20% chance it will give a refund of $24,000. In addition, Jonas believes it is probable that a significant reversal of any previously recognized revenue will not occur. The contract performance is determined to be satisfied over time. Required: 1. Determine the monthly transaction price that Jonas should use for recording the contract and prepare Jonas’s journal entry at the end of the first month of the contract using the most likely amount approach.
On January 1, Revis Consulting entered into a contract to complete a cost reduction program for Green Financialover a six-month period. Revis will receive $20,000 from Green at the end of each month. If total cost savingsreach a specific target, Revis will receive an additional $10,000 from Green at the end of the contract, but if totalcost savings fall short, Revis will refund $10,000 to Green. Revis estimates an 80% chance that cost savings willreach the target and calculates the contract price based on the expected value of future payments to be received.Required:Prepare the following journal entries for Revis:1. Prepare the journal entry on January 31 to record the collection of cash and recognition of the first month’srevenue.2. Assuming total cost savings exceed target, prepare the journal entry on June 30 to record receipt of the bonus.3. Assuming total cost savings fall short of target, prepare the journal entry on June 30 to record payment of thepenalty
Jones Corporation enters into a contract with Warner Video to add their programs to Jones' network. Warner will pay Jones an upfront fixed fee of $290,000 for 12 months of access, and will also pay a $120,000 bonus if Jones' users access Warner Video for at least 10,000 hours during the 12 month period. Jones estimates that it has a 60% chance of earning the $120,000 bonus. Refer to Jones Corporation. Upon collection of the upfront fee, Jones would recognize a/an ________.
Please help with answers asap