1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Elza [17]
3 years ago
7

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 $53,600 from Green at the end of each month. If total cost savings reach a specific target, Revis will receive an additional $26,800 from Green at the end of the contract, but if total cost savings fall short, Revis will refund $26,800 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.Prepare the following journal entries for Revis:
1. The journal entry on January 31 to record the first month of revenue under the contract.
2. Assuming total cost savings exceed target, the journal entry on June 30 to record receipt of the bonus.
3. Assuming total cost savings fall short of target, the journal entry on June 30 to record payment of the penalty.
Business
1 answer:
Naddika [18.5K]3 years ago
6 0

Answer:

1. Jan 31  Debit Cash $53,600

                         Credit Accounts receivable $53,600

2. June 30  Debit Cash $80,400

                           Credit Deferred Revenue $21,440

                           Credit Bonus Received $5,360

                           Credit Accounts Receivable $53,600

3. June 30 Debit  Penalty Payable $26,800

                 Debit Cash                       $53,600

                             Credit Accounts Receivable $53,600              

                             Credit Deferred Revenue $21,440

                             Credit Bonus adjustment $5,360

Explanation:

The question required that the month end revenue actually realized under the contract be journalized.

1.$53,600/- is a monthly payment which Revis will be receiving from Green Financial for every month for 6 months. Hence the receipt increases cash/bank balance and these are receivable under the contract. Hence accounts receivable is credited against the actual money received in the first month.

2.If cost saving targets are achieved by Revis, then apart from the monthly payment of $53,600/-, Green Financials has agreed to pay $26,800/- as bonus. Since the question states that Revis estimates that 80% it will reach the target, it would have accounted for the 80% as deferred revenue to be received. Hence 80% of $26,800/- is recorded under deferred revenue. Since now entire $26,800/- is received, the remaining 20% is shown as bonus received.  

3.When the targets are not met, the deferred revenue recognized is reversed and penalty is paid. The difference of 20% is shown as bonus adjustment amount. The regular monthly income of $53,600/- is recognized as is.

You might be interested in
If a firm produces a good and then adds it to its inventory rather than selling it, for the purposes of GDP accounting the firm
fenix001 [56]

Answer:

The statement is true.

Explanation:

Investment expenditure refers to the expenses incurred on account of creating capital assets.

If a good is produced but is left unsold or not used in the production process, then, they result in increased inventory, which is considered as an investment by the firm.

For the purpose of GDP accounting, unsold goods in inventory are treated as purchased by the firm from itself. As such, they form a part of investment expenditure in the accounting period.

8 0
3 years ago
Which of the following characteristics apply to unit investment trusts? I) Most are invested in fixed-income portfolios. II) The
sweet-ann [11.9K]

Answer:

I) Most are invested in fixed-income portfolios.

IV) The portfolio is fixed for the life of the fund.

Explanation:

Unit investment trusts is one in which Pools of money is invested in a portfolio which is fixed for the life of the fund. This is generally stocks and bonds which are redeemable units to investor for specific time. These investment portfolio have no board of directors. This is a type of mutual fund which offers investors having fixed portfolio of securities having definite life.

3 0
3 years ago
A local college of business offers an outstanding business school education. Cali pays the tuition to attend and earns her MBA w
GrogVix [38]

Answer:

Yes, there is marketing exchange.

Explanation:

Marketing exchange is the exchange which happens or take place when two or more people trade services or goods. In theory of marketing, each exchange is supposed to have a utility.

So, in this case, there is marketing exchange of paying the tuition fees for or against the knowledge and it directly lead to the new job of Cali.

8 0
3 years ago
Electricity for All (EFA) is preparing for their Initial Public Equity Offering (IPO). Being in a highly regulated industry, and
kirza4 [7]

Answer:

the dividend per share is $18.85 per share

Explanation:

The computation of the dividend per share is shown below:

We now that

price per share = Dividend ÷ (required rate of return - growth rate)

$145 = Dividend ÷ (13% - 0%)

So, the dividend is

= $145 × 13%

= $18.85 per share

Hence, the dividend per share is $18.85 per share

3 0
2 years ago
The Securities and Exchange Commission is an example of a​ _____.
galben [10]

Answer:

(A). Federal Administrative Agency

Explanation:

The Securities and Exchange Commission(SEC) is an independent federal government agency responsible for protecting investors, maintaining fair and orderly functioning of the securities market.

The Securities and Exchange Commission was created in 1934 to help restore investor confidence in the wake of the 1929 Stock Market Crash.

The SEC is allowed to bring only civil actions, either in federal court or before an administrative judge.

Most of the administrative agencies are under the supervision of the President. Since SEC is an independent body, the President exercises limited power and control over it. But he does play a major role in influencing the activities of such independent bodies.

Thus, The Securities and Exchange Commission is an example of a Federal Administrative Body i.e option (A).

8 0
3 years ago
Other questions:
  • In an open economy, national saving equals a. domestic investment. b. domestic investment plus net capital outflow. c. domestic
    14·1 answer
  • On January 2, 2016, Alpha Company acquired a new machine by signing a 5 year note for $62,000. The estimated service life is eig
    9·1 answer
  • Suppose price is initially $20, but then decreases to $15. The absolute value of the percentage change in price (using the midpo
    11·2 answers
  • What can influence a stocks price
    12·1 answer
  • The 2016 annual report for Mega Mills disclosed that 1 billion shares of common stock have been authorized. At the end of 2015,
    12·1 answer
  • Eula, a company that manufactures soda, offers its latest products at very low prices. Eula's strategy is based on the assumptio
    14·1 answer
  • Dr. Bahri discusses how fast an organization can implement lean, what are the two dimensions of lean and how do they relate to o
    15·1 answer
  • In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five y
    6·2 answers
  • What type of contract is a hire purchase agreement?
    15·1 answer
  • A person who is involved in the process of creating and managing a business to achieve his or her desired objectives is engaged
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!