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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.

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ekkarill92 answered 9 months ago
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