On January 1, Seneca Asset Management enters into a contract with a client to provide fund management services for one year. The client is required to pay a fixed amount of $100,000 at the end of each quarter, plus 10 percent of the increase in the fund's value relative to an observable index at the end of the year. Assume the fund increased by $800,000 over the course of the year.
1. Prepare the journal entry to record the first fixed payment.
2. Prepare the journal entry to record any additional revenue beyond the $100,000 fixed payment at the end of the fourth quarter