1.
Adjusting entries are the entries required to be passed at the end of the financial year to match the revenues and its related expenses by making the adjustment for any expenses payable, revenue unearned, prepaid expenses, etc.
To determine:TheJournal entry for recording the payment received in advance for service to be rendered.
2
Adjusting Entries:
Adjusting entries are the entries required to be passed at the end of the financial year to match the revenues and its related expenses by making the adjustment for any expenses payable, revenue unearned, prepaid expenses, etc.
To determine:The
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Loose Leaf for Financial Accounting: Information for Decisions
- On April 1st, Bob the Builder entered into a contract of one-month duration to build a barn for Nolan. Bob is guaranteed to receive a base fee of $5,000 for his services in addition to a bonus depending on when the project is completed. Nolan created incentives for Bob to finish the barn as soon as he can without jeopardizing the structural integrity of the barn. Nolan offered to pay an additional 30% of the base fee if the project finished 2 weeks early and 10% if the project finished a week early. The probability of finishing 2 weeks early is 30% and the probability of finishing a week early is 60%. What is the expected transaction price if Bob estimates variable consideration as the expected value?arrow_forwardOn April 1st, Ma Construction entered into a contract of one-month duration to build a barn for Valley Properties. Ma is guaranteed to receive a base fee of $5,000 for its services in addition to a bonus depending on when the project is completed. Valley Properties created incentives for Ma to finish the barn as soon as they can without jeopardizing the structural integrity of the barn. Valley offered to pay an additional 30% of the base fee if the project finished 2 weeks early and 10% if the project finished a week early. The probability of finishing 2 weeks early is 30% and the probability of finishing a week early is 60%.What is the expected transaction price with variable consideration estimated as the most likely amount? Group of answer choices $5,000 $5,750 $5,500 $4,750arrow_forwardIn March, Crane Company completes Jobs 10 and 11. Job 10 cost $21,000 and Job 11 $31,000. On March 31, Job 10 is sold to the customer for $35,000 in cash.Journalize the entries for the completion of the two jobs and the sale of Job 10.arrow_forward
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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 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.arrow_forwardRustic Construction Company uses the percentage of completion method of recognizing revenue on construction contracts. It uses full accrual accounting and prepares monthly financial statements. Rustic’s records showed the following data relating to the construction of an office building: Total contract awarded $99,600Total estimated costs on the project $99,600 - $18,000Payments from the buyer on April 25th = 30% of contractPayments from the buyer on June 17th = 30% of contractPayments from the buyer on July 30th = 40% of contractCosts incurred on the project and billed for the month of April = 40% of totalCosts incurred on the project and billed for the month of May = 30% of totalCosts incurred on the project and billed for the month of June = 30% of totalProject was completed at the end of month 3. Required 1: Assuming no other transaction happened, what is the balance of Accounts Receivables at April 30th? $ Required 2: Assuming no other transaction happened, what is the…arrow_forwardOn 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 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 do not reach the target, prepare the journal entry, if…arrow_forward
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