On October I, 2021 Jones & Hill, a consulting firm, enters a contract to help BGSE,...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On October I, 2021 Jones & Hill, a consulting firm, enters a contract to help BGSE, a local pediatric dental provider, design a marketing strategy to compete with Kids Kings Dental. The contract spans eight months. BGSE promises to pay $25,500 at the end of each month. At the end of the contract, Jones & Hill either will give BGSE a refund of S7,500 or will be entitled to an additional $7.500 bonus, depending on whether services at BGSE have increased to a target level. At the inception of the contract, Jones & Hill estimates an 65% chance that it will earn the $7.500 bonus and calculates the contract price based on the expected value of future payments to be received. At the beginning Harris of the 6th month, March 1" and after recording the February 28th entry. circumstances change, and Jones & Hill revises to 75% its estimate of the probability that it will carn the bonus. At the end of the contract, Jones & Hill do not receive the additional consideration of $7,500 and are required to refund BGSE. Assume Jones & Hill has a December 31" year-end. Required: 1. Briefly describe the difference between the "most likely amount" and the "expected value" approach." 2. Prepare the journal entries related to the contract as indicated. 3. Additionally, please indicate amounts to be reported on the balance sheet (ignore cash) and income statement on December 31, 2021 for Jones & Hill. Journal Entry October 31" Balance Sheet - December 31, 2021 Income Statement - For Year-ended December 31, 2021 Entry on March 1" to adjust based on the revised estimate March 31 entry May 31st entry On October I, 2021 Jones & Hill, a consulting firm, enters a contract to help BGSE, a local pediatric dental provider, design a marketing strategy to compete with Kids Kings Dental. The contract spans eight months. BGSE promises to pay $25,500 at the end of each month. At the end of the contract, Jones & Hill either will give BGSE a refund of S7,500 or will be entitled to an additional $7.500 bonus, depending on whether services at BGSE have increased to a target level. At the inception of the contract, Jones & Hill estimates an 65% chance that it will earn the $7.500 bonus and calculates the contract price based on the expected value of future payments to be received. At the beginning Harris of the 6th month, March 1" and after recording the February 28th entry. circumstances change, and Jones & Hill revises to 75% its estimate of the probability that it will carn the bonus. At the end of the contract, Jones & Hill do not receive the additional consideration of $7,500 and are required to refund BGSE. Assume Jones & Hill has a December 31" year-end. Required: 1. Briefly describe the difference between the "most likely amount" and the "expected value" approach." 2. Prepare the journal entries related to the contract as indicated. 3. Additionally, please indicate amounts to be reported on the balance sheet (ignore cash) and income statement on December 31, 2021 for Jones & Hill. Journal Entry October 31" Balance Sheet - December 31, 2021 Income Statement - For Year-ended December 31, 2021 Entry on March 1" to adjust based on the revised estimate March 31 entry May 31st entry
Expert Answer:
Answer rating: 100% (QA)
Question 1 Most likely amount is the single most likely amount in a range of possible consideration amounts This method is may be used to estimate variable consideration when the contract has only two ... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-1260481952
10th edition
Authors: J. David Spiceland, James Sepe , Mark Nelson, Wayne Thomas
Posted Date:
Students also viewed these accounting questions
-
An annuity paying $1400 at the end of each month (except for a smaller final payment) was purchased with $225,000 that had accumulated in an RRSP. The annuity provides a semiannually compounded rate...
-
The price of pizza is pz = 20 per unit. (a) Donna spends all of her income, 100 dollars, on pizza (z) and tacos (t). Donnas utility function is U(z, t) = z 0.9 t 0.1 . (a.1) Derive Donnas demand...
-
An investment will pay $100 at the end of each of the next 3 years, $200 at the end of Year 4, $300 at the end of Year 5, and $500 at the end of Year 6. If other investments of equal risk earn 8%...
-
If two companies in the same industry use different methods to value inventory, this makes comparisons more difficult but not impossible. a. True b. False 2. An increase in a company's revenue and...
-
The use of a convenience sample in organizational research is correct because all members share the same organizational stimuli and go through almost the same kinds of experiences in their...
-
Banana Computer Company sells Banana computers in both the domestic and foreign markets. Because of differences in the power supplies, a Banana purchased in one market cannot be used in the other...
-
The probabilities that a quality control team will visit \(0,1,2,3\), or 4 production sites on a single day are 0.15,0.22,0.35,0.21, and 0.07. (a) Simulate the inspection team's visits on 30 days....
-
Wisconsin Wire (WW) has implemented a just-in-time inventory system for the production of its insulated wire. Inventories of raw material and work in process are so small that WW uses a Raw and...
-
Consider the following data set and the piecewise cubic function {(0,0), (1, 1), (2,5)}, - C(x): = { x+(181)x(x-1) + (81 +82 2)x2(x 1) - if x [0,1] 1+4(x-1)+(482) (x-1)(x-2)+ (82 + 83 - 8)(x-1)2(x-2)...
-
Thomas was raised with an understanding of the fundamental differences between right and wrong. As an adult, he wasn't making enough money to purchase a new car as quickly as he liked. He found out...
-
A 100,000 liter underground storage tank (UST) has leaked its entire contents into the surrounding subsurface. A portion of the spill remained hung up in the vadose zone due to negative pressures...
-
For the mechanical system shown: a. Find the transfer function Xo(s)/Xa(s). b. What is the time constant. Comment on the stability of the system. Let K 2 N/m, K = 1 N/m, and B = an input of xa (t) 1...
-
Consider the summary output of the following two regressions where the analysis is separated for the American and National leagues. (Some of the output is omitted to save space.) American League:...
-
Build a toy Robo advisor program that: a) Calculate the expected number of years left for your client (i.e., life expectancy). explain the logic behind the life expectancy calculation and asset...
-
The following are extracts of the Income Statement and Balance Sheet of Universal Ltd. Non-current Asset Vehicle Furniture Current Assets Inventory Receivable Balance at Bank Cash In hand Total...
-
You firm is considering in buying several companies, and then making improvements at each of these companies with the hope of selling at a profit. The companies are in several sectors. The sector of...
-
5. Decrypt the ciphertext message "UXDL" that was encrypted with the function f(p) = (5p+ 3) mod 26. ABCDEFGHIJKLM 2 3 4 5 6 7 8 9 10 11 12 0 1 2 NO PQRSTUVWXYZ 13 14 15 16 17 18 19 20 21 22 23 24 25
-
Copy and complete the statement. 3800 m ? km =
-
Mountain High Ice Cream Company transferred $60,000 of accounts receivable to the Prudential Bank. The transfer was made without recourse. Prudential remits 90% of the factored amount to Mountain...
-
IGF Foods Company is a large, primarily domestic, consumer foods company involved in the manufacture, distribution, and sale of a variety of food products. Industry averages are derived from Troys...
-
Refer to the situation described in BE 10-14. Assuming the company uses the weighted-average method, calculate the amount of interest capitalized for the year.
-
The materials which exhibit the same elastic properties in all directions are known as: (a) Homogeneous (b) Isotropic (c) Isentropic (d) Inelastic
-
Curtis turbine is: (a) Simple impulse turbine (b) Simple reaction turbine (c) Pressure compounded turbine (d) Velocity compounded turbine
-
In a reaction steam turbine, steam expands: (a) In nozzle only (b) In moving blades only (c) Partly in nozzle partly in blades (d) None of the above
Study smarter with the SolutionInn App