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Andre45 [30]
3 years ago
14

Velocity, a consulting firm, enters into a contract to help Burger Boy, a fast-food restaurant, design a marketing strategy to c

ompete 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.
Business
1 answer:
romanna [79]3 years ago
5 0

Answer:

the journal entries:

to record the contract

Dr Accounts receivable 96,000

Dr Bonus receivable 2,400

    Cr Service revenue 98,400

to record adjustment of bonus receivable at month 5:

Dr Service revenue 6,400

    Cr Bonus receivable 6,400

to record service revenue for the fifth month:

Dr Accounts receivable 96,000

Dr Bonus receivable 800

    Cr Service revenue 96,800

to record getting the bonus:

Dr Cash 32,000

    Cr Bonus receivable 6,400

    Cr Service revenue 25,600

Explanation:

total value of the contract:

[($96,000 x 8) + $32,000] x 0.8 = $640,000

[($96,000 x 8) - $32,000] x 0.2 = $147,200

total expected value = $787,200

expected value of the bonus = $787,200 - ($96,000 x 8) = $19,200, monthly bonus receivable $19,200 / 8 = $2,400

the adjustments required during the fifth month:

[($96,000 x 8) + $32,000] x 0.6 = $480,000

[($96,000 x 8) - $32,000] x 0.4 = $294,400

total expected value = $774,400

expected value of the bonus = $774,400 - ($96,000 x 8) = $6,400, monthly bonus receivable $6,400 / 8 = $800

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suter [353]

Answer:

Company's net income will increase by $2500 if the product line is discontinued.

Explanation:

From the data given:

Sales                                      25000

variable cost (less)                 19000

contribution margin               6000

Fixed costs

directed fixed costs                7000

allocated fixed costs               5000

net income                             -6000

Fixed cost savings                   7000

rental revenue                           1500

total savings if discontinued    8500

contribution margin (less)         6000

net income increased by          2500

5 0
3 years ago
Cost of goods sold $500,000 Average inventory 62,500 Determine (a) the inventory turnover and (b) the number of days' sales in i
nadya68 [22]

Answer:

(a) 8 times

(b) 45.6 days

Explanation:

Given that,

Cost of goods sold = $500,000

Average inventory = $62,500

Assume 365 days a year.

(a) Inventory turnover ratio:

= Cost of goods sold ÷ Average inventory

= $500,000 ÷ $62,500

= 8 times

(b) Number of days' sales in inventory days:

= 365 days ÷ Inventory turnover ratio

= 365 days ÷ 8

= 45.6 days

8 0
3 years ago
On September 1, 2021, Southwest Airlines borrows $39.3 million, of which $6.6 million is due next year. Show how Southwest Airli
Pavlova-9 [17]

Answer:

Balance sheet

Current liability:

Current portion of long term debt = $6,600,000

Long term liability:

Notes payable = ($39,300,000 - $6,600,000)

                        = $32,700,000

Therefore,

Total liabilities = Current liabilities + Long term liabilities

                        = $6,600,000 + $32,700,000

                        = $39,300,000

4 0
3 years ago
With respect to how economists study the economy, which of the following statements is most accurate?a. Economists study the pas
NARA [144]

Answer:

c. Economists devise theories, collect data, and analyze the data to test the theories

Explanation:

Economists use past data to predict the future.

They make use of sound economic theory instead of rule of thumb to predict the future.

I hope my answer helps you

4 0
3 years ago
What microeconomic factors point to the fact that your business should be successful? Be sure to provide evidence for your claim
SashulF [63]

The microeconomic factors that are important to consider in business is competition, the supply and demand, elasticity of the goods and similar variables. Depending on the business, each has factor has a unique impact which  can either help or ruin the business.Thank you for your question. Please don't hesitate to ask in Brainly your queries.
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3 years ago
Read 2 more answers
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