Rocky Guide Service provides guided 1 to 5 day hiking tours throughout the Rocky Mountains. Wilderness Tours hires Rocky to lead arious tours that Wilderness sells. Rocky receives $2,400 per tour day, and shortly after the end of each month, Rocky learns wheth will receive a $240 bonus per tour day it guided during the previous month if its service during that month received an average valuation of "excellent" by Wilderness customers. The $2,400 per day and any bonus due are paid in one lump payment shortly afte he end of each month. On July 1, based on prior experience, Rocky estimated there is a 30% chance it will earn the bonus for July tours. It guided a total 10 days from July 1 to July 15. On July 16, based on Rocky's view that it had provided excellent service during the first part of the month, Rocky revised its estima to an 80% chance it would earn the bonus for July tours. Rocky also guided customers for 15 days from July 16 to July 31. On August 5, Rocky learned it did not receive an average evaluation of "excellent" for its July tours, so it would not receive any bonus for July, and received all payment due for the July tours. tocky bases estimates of variable consideration on the expected value it expects to receive. Required: 1. Prepare Rocky's July 15 journal entry to record revenue for tours given from July 1-July 15. 2. Prepare Rocky's July 31 journal entry to record revenue for tours given from July 16-July 31. 3. Prepare Rocky's August 5 journal entry to record any necessary adjustments to revenue and receipt of payment from Wildernes
Rocky Guide Service provides guided 1 to 5 day hiking tours throughout the Rocky Mountains. Wilderness Tours hires Rocky to lead arious tours that Wilderness sells. Rocky receives $2,400 per tour day, and shortly after the end of each month, Rocky learns wheth will receive a $240 bonus per tour day it guided during the previous month if its service during that month received an average valuation of "excellent" by Wilderness customers. The $2,400 per day and any bonus due are paid in one lump payment shortly afte he end of each month. On July 1, based on prior experience, Rocky estimated there is a 30% chance it will earn the bonus for July tours. It guided a total 10 days from July 1 to July 15. On July 16, based on Rocky's view that it had provided excellent service during the first part of the month, Rocky revised its estima to an 80% chance it would earn the bonus for July tours. Rocky also guided customers for 15 days from July 16 to July 31. On August 5, Rocky learned it did not receive an average evaluation of "excellent" for its July tours, so it would not receive any bonus for July, and received all payment due for the July tours. tocky bases estimates of variable consideration on the expected value it expects to receive. Required: 1. Prepare Rocky's July 15 journal entry to record revenue for tours given from July 1-July 15. 2. Prepare Rocky's July 31 journal entry to record revenue for tours given from July 16-July 31. 3. Prepare Rocky's August 5 journal entry to record any necessary adjustments to revenue and receipt of payment from Wildernes
Chapter10: Project Cash Flows And Risk
Section: Chapter Questions
Problem 14PROB
Related questions
Question
A4
![Exercise 6-11 (Algo) Variable consideration - expected value; change in estimate [LO6-3, 6-6]
Rocky Guide Service provides guided 1 to 5 day hiking tours throughout the Rocky Mountains. Wilderness Tours hires Rocky to lead
various tours that Wilderness sells. Rocky receives $2,400 per tour day, and shortly after the end of each month, Rocky learns whether
it will receive a $240 bonus per tour day it guided during the previous month if its service during that month received an average
evaluation of "excellent" by Wilderness customers. The $2,400 per day and any bonus due are paid in one lump payment shortly after
the end of each month.
• On July 1, based on prior experience, Rocky estimated there is a 30% chance it will earn the bonus for July tours. It guided a total of
10 days from July 1 to July 15.
• On July 16, based on Rocky's view that it had provided excellent service during the first part of the month, Rocky revised its estimate
to an 80% chance it would earn the bonus for July tours. Rocky also guided customers for 15 days from July 16 to July 31.
• On August 5, Rocky learned it did not receive an average evaluation of "excellent" for its July tours, so it would not receive any
bonus for July, and received all payment due for the July tours.
Rocky bases estimates of variable consideration on the expected value it expects to receive.
Required:
1. Prepare Rocky's July 15 journal entry to record revenue for tours given from July 1-July 15.
2. Prepare Rocky's July 31 journal entry to record revenue for tours given from July 16-July 31.
3. Prepare Rocky's August 5 journal entry to record any necessary adjustments to revenue and receipt of payment from Wilderness.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3785c0d8-50ab-45bb-b986-40019a405599%2F1c78acef-0b79-4173-9105-fe340be6c7cb%2Fv28bm2_processed.png&w=3840&q=75)
Transcribed Image Text:Exercise 6-11 (Algo) Variable consideration - expected value; change in estimate [LO6-3, 6-6]
Rocky Guide Service provides guided 1 to 5 day hiking tours throughout the Rocky Mountains. Wilderness Tours hires Rocky to lead
various tours that Wilderness sells. Rocky receives $2,400 per tour day, and shortly after the end of each month, Rocky learns whether
it will receive a $240 bonus per tour day it guided during the previous month if its service during that month received an average
evaluation of "excellent" by Wilderness customers. The $2,400 per day and any bonus due are paid in one lump payment shortly after
the end of each month.
• On July 1, based on prior experience, Rocky estimated there is a 30% chance it will earn the bonus for July tours. It guided a total of
10 days from July 1 to July 15.
• On July 16, based on Rocky's view that it had provided excellent service during the first part of the month, Rocky revised its estimate
to an 80% chance it would earn the bonus for July tours. Rocky also guided customers for 15 days from July 16 to July 31.
• On August 5, Rocky learned it did not receive an average evaluation of "excellent" for its July tours, so it would not receive any
bonus for July, and received all payment due for the July tours.
Rocky bases estimates of variable consideration on the expected value it expects to receive.
Required:
1. Prepare Rocky's July 15 journal entry to record revenue for tours given from July 1-July 15.
2. Prepare Rocky's July 31 journal entry to record revenue for tours given from July 16-July 31.
3. Prepare Rocky's August 5 journal entry to record any necessary adjustments to revenue and receipt of payment from Wilderness.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 4 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you