Question

In: Accounting

Jonas Consulting enters into a contract to provide cost management consulting services over a one-year period...

Jonas Consulting enters into a contract to provide cost management consulting services over a one-year period for $10,000 per month on January 1. At the end of the contract, Jonas will either give the customer a $24,000 refund or be entitled to an additional $24,000, depending on the level of cost savings. The company believes there is an 80% chance that it will be entitled to an additional $24,000 and a 20% chance it will give a refund of $24,000. In addition, Jonas believes it is probable that a significant reversal of any previously recognized revenue will not occur. The contract performance is determined to be satisfied over time.

Part A: Prepare the journal entry on January 31 to record the first month of the contract using the most likely amount approach.

Part B: Determine the monthly transaction price that Jonas should use for recording the contract using the most likely amount approach.

Solutions

Expert Solution

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Jonas Consulting enters into a contract to provide cost management consulting services over a one-year period...
Jonas Consulting enters into a contract to provide cost management consulting services over a one-year period for $10,000 per month on January 1. At the end of the contract, Jonas will either give the customer a $24,000 refund or be entitled to an additional $24,000, depending on the level of cost savings. The company believes there is an 80% chance that it will be entitled to an additional $24,000 and a 20% chance it will give a refund of $24,000....
1. On November 1, 2018, Taylor signed a one-year contract to provide handyman services on an...
1. On November 1, 2018, Taylor signed a one-year contract to provide handyman services on an as-needed basis to King Associates, with the contract to start immediately. King agreed to pay Taylor $5,400 for the one-year period. Taylor is confident that King will pay that amount, but payment is not scheduled to occur until 2019. Taylor should recognize revenue in 2018 in the amount of Multiple Choice a. $900 b. $2,700 c. $0 d. $5,400 2. Mary signed up and...
discuss now strategic cost management and contract management apply to the acquisition of goods and services...
discuss now strategic cost management and contract management apply to the acquisition of goods and services in both the public and private sectors.
Effective Contract Management Develop a contract management strategy for each of the following public services.  That is,...
Effective Contract Management Develop a contract management strategy for each of the following public services.  That is, you are assuming that the following three services will be provided by private contractors.  Thus, your job is to develop an adequate strategy to effectively manage these three separate privatization endeavors.  Make sure to link your strategies to concepts and issues discussed in the readings.  The services are: Parking meter maintenance and collection in a city Water distribution through a city Operation of homeless shelters in a...
Revenue recognition at a point in time or over time Kleymenova Consulting, Inc., enters into a...
Revenue recognition at a point in time or over time Kleymenova Consulting, Inc., enters into a contract to provide consulting services 1. The consulting services are the provision of technical computer assistance as needed. For $25,000 per month, whenever the client has a problem, it contacts Kleymenova, which dispatches a consultant to address the problem at no additional charge. 2. The consulting services are to develop a new customer payment collection system for the client. The $300,000 contract price is...
A firm enters into an 8-year contract for materials that cost $90,000 initially and $30,000/yr beginning...
A firm enters into an 8-year contract for materials that cost $90,000 initially and $30,000/yr beginning at the end of the 4th year. The company decides to make a lump sum payment at the end of year 2 to pay off the remainder of the contract. What lump sum is necessary at 8% interest?
Lim & Joyce Consulting provides consulting services related to project management and analytical support. It operates...
Lim & Joyce Consulting provides consulting services related to project management and analytical support. It operates in a very tight local labour market and is having difficulty finding quality staff. The firm bills $350 per hour for services performed. The labour cost per hour paid by Lim & Joyce Consulting for professional staff time is $135. Additional information is provided as follows: • Billable hours to clients for the year ended totalled 10 000, consisting of: analytical support services, 3...
An asset with the first cost of $100,000 is depreciated over a 5-year period. It is...
An asset with the first cost of $100,000 is depreciated over a 5-year period. It is expected to have a $10,000 salvage value at the end of 5 years. (1) Using the straight-line method, what is the net book value at the end of year 2? (2) Using the sum of years digit method, what is the depreciation expense for year 1? (3) Using the double-declining balance method, what is the depreciation expense for year 3? Plz type the answer...
Mercure Corporation enters into a contract with Pluton Ltd. to provide a system that manages Pluton’s...
Mercure Corporation enters into a contract with Pluton Ltd. to provide a system that manages Pluton’s portfolio of clients for 5 years. Mercure will not transfer the system to Pluton, but it will provide the system and the services included in the contract while it is still valid. The contract is renewable for subsequent one-year periods. Mercure incurred the following costs to obtain the contract: $2,000 bonus paid to the accounting department for preparing the proposal at very short notice....
What are the salient characteristics of strategic cost management and contract management?
What are the salient characteristics of strategic cost management and contract management?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT