On August 10,2020, Shredders Inc. enters into a contract with Lawyers LLP to provide mobile shredding...

 

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On August 10,2020, Shredders Inc. enters into a contract with Lawyers LLP to provide mobile shredding services at Lawyers LLP's offices for a three-month period beginning on September 1st, 2020. The contract requires Shedders to bring one of its unmarked mobile shredding trucks to Lawyers LLP's office every Friday morning throughout the contract period. The contract is for $6000, Shedders agrees to shred up to 80 copier paper boxes of confidential documents each month and take the contents to the local landfill. Any additional boxes will be shredded at the cost of $30 per box, with Shedders invoicing these amounts at the end of each month. Lawyers LLP agreed to pay one-third of the contract on the first day of each month. Shedders prepares its financial statements on a monthly basis. The actual number of boxes shredded was as follows: September 95 Boxes October 72 Boxes November 90 boxes All payments required under the contract was made by Lawyers LLP, including the charges for excess shredding which were paid on October 10th and December 8th Required a. Determined how much revenue Shedders would be able to recognize in each month of the contract. Use the five-step model for revenue recognition in preparing your responses. b. Prepare all of the required journal entries for the above transactions based on your analysis in part A. On August 10,2020, Shredders Inc. enters into a contract with Lawyers LLP to provide mobile shredding services at Lawyers LLP's offices for a three-month period beginning on September 1st, 2020. The contract requires Shedders to bring one of its unmarked mobile shredding trucks to Lawyers LLP's office every Friday morning throughout the contract period. The contract is for $6000, Shedders agrees to shred up to 80 copier paper boxes of confidential documents each month and take the contents to the local landfill. Any additional boxes will be shredded at the cost of $30 per box, with Shedders invoicing these amounts at the end of each month. Lawyers LLP agreed to pay one-third of the contract on the first day of each month. Shedders prepares its financial statements on a monthly basis. The actual number of boxes shredded was as follows: September 95 Boxes October 72 Boxes November 90 boxes All payments required under the contract was made by Lawyers LLP, including the charges for excess shredding which were paid on October 10th and December 8th Required a. Determined how much revenue Shedders would be able to recognize in each month of the contract. Use the five-step model for revenue recognition in preparing your responses. b. Prepare all of the required journal entries for the above transactions based on your analysis in part A.

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