P $6-5$ Variable consideration LO$6-3,$ LO$6-6$

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On January $1,$ Revis Consulting entered into a contract to complete a cost reduction program for Green Financial over a six$-$month period.

Revis will receive $$20,000$ from Green at the end of each month. If total cost savings reach a specific target, Revis will receive an additional

$$10,000$ from Green at the end of the contract, but if total cost savings fall short, Revis will refund $$10,000$ to Green. Revis estimates an

$80\%$ chance that cost savings will reach the target and calculates the contract price based on the expected value of future payments to be

received.

Required:

Prepare the following journal entries for Revis:

Prepare the journal entry on January $31$ to record the collection of cash and recognition of the first month's revenue.

Assuming total cost savings exceed target, prepare the journal entry on June $30$ to record receipt of the bonus.

Assuming total cost savings fall short of target, prepare the journal entry on June $30$ to record payment of the penalty.P $65$ Variable consideration $$ LO$63,$ LO$66$ On January $1,$ Revis Consulting entered into a contract to complete a cost reduction program for Green Financial over a six$-$month period. Revis will receive $$20,000$ from Green at the end of each month. If total cost savings reach a specific target, Revis will receive an additional $$10,000$ from Green at the end of the contract, but if total cost savings fall short, Revis will refund $$10,000$ to Green. Revis estimates an $80\%$ chance that cost savings will reach the target and calculates the contract price based on the expected value of future payments to be received. Required: Prepare the following journal entries for Revis: Prepare the journal entry on January $31$ to record the collection of cash and recognition of the first month$$s revenue. Assuming total cost savings exceed target, prepare the journal entry on June $30$ to record receipt of the bonus. Assuming total cost savings fall short of target, prepare the journal entry on June $30$ to record payment of the penalty.