Question: Are my Journal entries correct for this problem? Velocity, a consulting firm, enters into a contract to help Burger Boy, a fast-food restaurant, design a

Are my Journal entries correct for this problem?

Are my Journal entries correct for this problem? Velocity, a consulting firm,

enters into a contract to help Burger Boy, a fast-food restaurant, design

a marketing strategy to compete with Burger King. The contract spans eight

months. Burger Boy promises to pay $90,000 at the end of each

month. At the end of the contract, Velocity either will give Burger

Velocity, a consulting firm, enters into a contract to help Burger Boy, a fast-food restaurant, design a marketing strategy to compete with Burger King. The contract spans eight months. Burger Boy promises to pay $90,000 at the end of each month. At the end of the contract, Velocity either will give Burger Boy a refund of $30,000 or will be entitled to an additional $30,000 bonus, depending on whether sales at Burger Boy at year-end have increased to a target level. At the inception of the contract. Velocity estimates an 80% chance that it will earn the $30,000 bonus and calculates the contract price based on the expected value of future payments to be received. At the start of the fifth month, circumstances change, and Velocity revises to 60% its estimate of the probability that it will earn the bonus. At the end of the contract, Velocity receives the additional consideration of $30,000. Boy par will D At theed one 0%, it 30,000 eatt will Journal entry worksheet 2 3 4 Record the entry to record revenue each month for the first four months of the contract Note: Enter debits before credits. Transaction General Journal Debit Credit Accounts receivable Bonus receivable 90,000 2,250 Service revenue 92,250 Journal entry worksheet 1 3 4 Record the entry at the start of the fifth month to recognize the change in estimate associated with the reduced likelihood that the $30,000 bonus will be received. Note: Enter debits before credits. Transaction General Journal Debit Credit Service revenue 6,000 Bonus receivable 6,000 Journal entry worksheet 1 2 4 Record the entry to record revenue each month for the second four months of the contract. Note: Enter debits before credits. Transaction General Journal Debit Credit Accounts receivable Bonus receivable 90,000 750 Service revenue 90,750 Journal entry worksheet 2 4 Record the entry after eight months to record receipt of the $30,000 bonus. Note: Enter debits before credits. Transaction General Journal Debit Credit 4 Cash 30,000 6,000 24,000 Bonus receivable Service revenue

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