quired: Do the following for Wiggins: a. Prepare the journal entry on July 31 to record the first month of revenue under the contract. b. Assuming total cost savings exceed the target, prepare the journal entry, if any, on October 31 to record receipt of the $20,000 bonus (ignore the normal October payment of $25,000). c. Assuming total cost savings d
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On July 1, Wiggins Associates enters into a contract to provide consulting services to Pennsylvania University (PU). The contract is anticipated to last four months and is intended to achieve significant cost savings at the university. The contract stipulates that PU will pay Wiggins $25,000 at the end of each month, and, if total cost savings reach a specific target, PU will pay an additional $20,000 to Wiggins at the end of the contract. Wiggins estimates a 75% chance that cost savings will reach the target.
Assume that Wiggins estimates uncertain consideration as the most likely amount.
Required:
Do the following for Wiggins:
a. Prepare the
b. Assuming total cost savings exceed the target, prepare the journal entry, if any, on October 31 to record receipt of the $20,000 bonus (ignore the normal October payment of $25,000).
c. Assuming total cost savings do not reach the target, prepare the journal entry, if any, on October 31 to record failure to receive the $20,000 bonus (ignore the normal October payment of $25,000).
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- On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million. The promise to transfer the warehouse is determined to be a performance obligation. The contract states that if the warehouse is usable by November 30, 2019, Elkhart will receive a bonus of 600,000. For every week after November 30 that the warehouse is not usable, the bonus will decrease by 150,000. Elkhart provides the following completion schedule: Required: 1. Assume that Elkhart uses the expected value approach. What amount should Elkhart use for the transaction price? 2. Assume that Elkhart uses the most likely amount approach. What amount should Elkhart use for the transaction price? 3. Next Level What is the purpose of assessing whether a constraint on the variable consideration exists?On July 1, Wiggins Associates enters into a contract to provide consulting services to Pennsylvania University (PU). The contract is anticipated to last four months and is intended to achieve significant cost savings at the university. The contract stipulates that PU will pay Wiggins $25,000 at the end of each month, and, if total cost savings reach a specific target, PU will pay an additional $20,000 to Wiggins at the end of the contract. Wiggins estimates a 75% chance that cost savings will reach the target. Assume that Wiggins estimates variable consideration as the expected value. Required: Prepare the journal entry on July 31 to record the first month of revenue under the contract. Note: 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 Record the first month of revenue under the contract.On July 1, Wiggins Associates enters into a contract to provide consulting services to Pennsylvania University (PU). The contract is anticipated to last four months and is intended to achieve significant cost savings at the university. The contract stipulates that PU will pay Wiggins $32,000 at the end of each month, and, if total cost savings reach a specific target, PU will pay an additional $27,000 to Wiggins at the end of the contract. Wiggins estimates a 80% chance that cost savings will reach the target. Assume that Wiggins estimates uncertain consideration as the most likely amount. Required: Do the following for Wiggins: a. Prepare the journal entry on July 31 to record the first month of revenue under the contract. b. Assuming total cost savings exceed the target, prepare the journal entry, if any, on October 31 to record receipt of the $27,000 bonus (ignore the normal October payment of $32,000). c. Assuming total cost savings do not reach the target, prepare the journal…
- On July 1, Wiggins Associates enters into a contract to provide consulting services to Pennsylvania University (PU). The contract is anticipated to last four months and is intended to achieve significant cost savings at the university. The contract stipulates that PU will pay Wiggins $27,000 at the end of each month, and, if total cost savings reach a specific target, PU will pay an additional $22,000 to Wiggins at the end of the contract. Wiggins estimates a 70% chance that cost savings will reach the target. Assume that Wiggins estimates variable consideration as the expected value. Required: Prepare the journal entry on July 31 to record the first month of revenue under the contract. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.Sherlock Associates enters into a contract dated July 1 to provide consulting services to Baker University ( BU). The anticipated term of the contract is four months and the purpose of the contract is to achieve significant cost savings at the university. There is a stipulation in the contract that BU will pay Sherlock $ 38,000 at the end of each month, and if total cost savings reach a specific target, BU will pay an additional $33,000 to Sherlock at the end of the contract. Sherlock estimates a 80% chance that cost savings will reach the target. Note: Sherlock estimates variable consideration as the expected value. Required: Prepare the journal entry on July 31 to record the first month of revenue under the contract. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Journal entry worksheet 1 Record the first month of revenue under the contract. Note: Enter debits before credits.On July 1, Wiggins Associates enters into a contract to provide consulting services to Pennsylvania University (PU). The contract is anticipated to last four months and is intended to achieve significant cost savings at the university. The contract stipulates that PU will pay Wiggins $43,000 at the end of each month, and, if total cost savings reach a specific target, PU will pay an additional $38,000 to Wiggins at the end of the contract. Wiggins estimates a 80% chance that cost savings will reach the target. Assume that Wiggins estimates uncertain consideration as the most likely amount. Required: Do the following for Wiggins: a. Prepare the journal entry on July 31 to record the first month of revenue under the contract. b. Assuming total cost savings exceed the target, prepare the journal entry, if any, on October 31 to record receipt of the $38,000 bonus (ignore the normal October payment of $43,000). c. Assuming total cost savings do not reach the target, prepare the journal…
- On July 1 Wiggins Associates enters into a contract to provide consulting services to Pennsylvania University (PU). The contract is anticipated to last four months and is intended to achieve significant cost savings at the university. The contract stipulates that PU will 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 Wiggins estimates uncertain consideration as the most likely amount. Required: Do the following for Wiggins a. Prepare the journal entry on July 31 to record the first month of revenue under the contract b. Assuming total cost savings exceed the target, prepare the journal entry, if any, on October 31 to record receipt of the $25,000 bonus ignore the normal October payment of $30.0001 c. Assuming total cost savings do not reach the target, prepare the journal entry, if…On July 1. Wiggins Associates enters into a contract to provide consulting services to Pennsylvania 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 will pay 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 to Wiggins at the end of the contract Wiggins estimates a 80% chance that cost savings will reach the target Assume that Wiggins estimates uncertain consideration as the most likely amount Required: Do the following for Wiggins a. 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 $25,000 bonus (ignoret the normol October payment of $30.000) c. Assuming total cost sovings do not reach the target, prepare the journal entry.…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
- On January 1, Revis Consulting entered into a contract to complete a cost reduction program for Green Financial over a six-month period. Revis will receive $68,000 from Green at the end of each month. If total cost savings reach a specific target, Revis will receive an additional $34,000 from Green at the end of the contract, but if total cost savings fall short, Revis will refund $34,000 to Green. Revis estimates an 80% chance that cost savings will reach 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's revenue. 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 the penalty. Note: If no…On January 1, Revis Consulting entered into a contract to complete a cost reduction program for Green Financial over a six-month period. Revis will receive $51,200 from Green at the end of each month. If total cost savings reach a specific target, Revis will receive an additional $25,600 from Green at the end of the contract, but if total cost savings fall short, Revis will refund $25,600 to Green. Revis estimates an 80% chance that cost savings will reach 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. to 3. Prepare the journal entry on January 31 to record the collection of cash and recognition of the first month’s revenue. Also record the entry on June 30 for receipt of the bonus assuming total cost savings exceed target. And record the entry on June 30 for payment of the penalty assuming total cost savings fall short of target. Do not give answer in imageInfotech Bhd enters a contract on 1 January 2019 to produce software for a customer for RM7,000,000. Infotech Bhd receives RM2,000,000 from the customer upon contract signing and the balance at the completion of the contract. According to the contract, the customer controls the system during the creation of the program. Infotech Bhd estimates that it will take two years to complete the project and uses the number of labor hours to estimate the rate of completion. Infotech spends 40,000 hours in the first year of the contract and another 10,000 hours the second year Prepare the entries recorded by Infotech over the life of this contract. Assume that all payments are complete by the end of 2020