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pogonyaev
3 years ago
11

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 $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. At the end of the contract, Velocity receives the additional consideration of $29,000.
Required:
a. Prepare the journal entry to record revenue each month for the first four months of the contract.
b. Prepare the journal entry that the Velocity Company would record after four months to recognize the change in estimate associated with the reduced likelihood that the bonus will be received.
c. Prepare the journal entry to record the revenue each month for the second four months of the contract.
d. Prepare the journal entry after eight months to record receipt of the cash bonus.
Business
1 answer:
madam [21]3 years ago
5 0

Answer:

a. Accounts Receivable (Dr.) $93,000

Bonus Receivable (Dr.) $2,325

Service Revenue (Cr.) $95,325

b. Service Revenue (Dr.) $9,300

Bonus receivable (Cr.) $9,300

c. Accounts Receivable (Dr.) $93,775

Bonus Receivable (Dr.) $775

Service Revenue (Cr.) $93,000

d. Cash (Dr.) $29,000

Bonus Receivable (Cr.) $29,000

Explanation:

The contract between Burger Boy and Velocity is for eight months.

Expected value of the contract on 1st month is :

80% * [ $93,000 * 8 months + $31,000 ] + 20% [ $93,000 * 8 months - $31,000] = $762,600

The expected value per month is $762,600 / 8 months = $95,325 per month

Expected value of the contract 5th month with revised probability is :

60% * [ $93,000 * 8 months + $31,000 ] + 40% [ $93,000 * 8 months - $31,000] = $750,200

The expected value per month is $750,200 / 8 months = $93,775 per month.

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Answer:

Explanation:

I believe the best advice that can be given is to do thorough research into the company before investing and do not invest more than you are willing to lose. Initial Public Offerings (IPO) can be incredibly risky investments because they can be complete scams or can be legit startup companies but make one mistake and quickly go bankrupt causing the shares to be worthless and you lose all of your money. But with great risk comes great reward, If they do manage to take you off you can make a lot of money. Therefore, research and invest only what you can live without is the best advice.

4 0
2 years ago
The quantity of money is ​$5 ​trillion, real GDP is ​$10 ​trillion, the price level is 0.9​, the real interest rate is 3 percent
andreyandreev [35.5K]

Answer:

(a) 2

(b) $10 trillion

(c) $0.4 trillion

Explanation:

Given that,

Quantity of money = ​$5 ​trillion

Real GDP = ​$10 ​trillion

Price level = 0.9​

Real interest rate = 3 percent

Nominal interest rate = 7 percent

Nominal interest rate = Real interest rate + Inflation rate

7% = 3% + Inflation rate

4% = Inflation rate

Velocity of​ circulation:

= GDP ÷ Total money supply

= ($10 × 1) ÷ $5

= 2

M × V = $5 ​trillion × 2

          = $10 trillion

Nominal GDP = Real GDP × Inflation

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4 0
2 years ago
In some employment situations, not all personnel can immediately evacuate a work area per the EAP. It may be that some equipment
yan [13]
I believe the answer is A, which is critical personnel

5 0
3 years ago
With reference to the expectancy theory, which of the following examples indicates a weak rewards-personal goals relationship? T
IgorC [24]

Answer:

The employee wants to be relocated to the Paris office but instead is transferred to Singapore.

Explanation:

The correct answer to the question is The employee wants to be relocated to the Paris office but instead is transferred to Singapore. According to the expectancy theory the individuals will act in a certain way because they are motivated and their actions will depend on the outcome of the decision. The action they take is completely dependent on what they assume the outcome of that decision to be. A weak reward personal goals relationship is that the employee wants to be relocated in Paris but instead is relocated to Singapore.

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3 years ago
What are indicators that economists use to measure how an economy grows? Select all that apply.
umka21 [38]

Answer;

  • measuring what the economy produces
  • studying the economy of another country
  • tracking how many workers have jobs

Explanation;

An economic indicator is a statistic about an economic activity. Economic indicators allow analysis of economic performance and predictions of future performance.

Economic indicators are key statistics that indicate the direction of an economy. While the indicators can be numerous, there are three broad categories of economic indicators: leading indicators, coincident indicators and lagging indicators.

6 0
2 years ago
Read 2 more answers
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