Richard Co has successfully built a practice that services small businesses by providing accounting related services....

 

Transcribed Image Text:

Richard Co has successfully built a practice that services small businesses by providing accounting related services. Richard Co will provide free training and initial implementation of accounting records through QuickBooks but requires a monthly subscription in order to access the account information. This training is otherwise provided for a one-time fee of $5,000. Upon subscription ($5k/month), Richard Co will perform all related accounting functions for the small business using QuickBooks. The subscription requires a 3 vear contract. Premium Services can be purchased at a 10% discount, if included in the contract, which includes 24/7 direct hotline to senior accountants within Richard Co. The Premium Services are routinely sold at standalone prices of $50/hr. Richard estimates that a typical client will utilize this service on average of 20 hours a month. 1) Perform the 5 steps of Revenue Recognition assuming a client purchased the maximum package. Assume the estimate and actual of hours for Premium Services has no variances. 2) Record all necessary entries for the first year of the contract Richard Co has successfully built a practice that services small businesses by providing accounting related services. Richard Co will provide free training and initial implementation of accounting records through QuickBooks but requires a monthly subscription in order to access the account information. This training is otherwise provided for a one-time fee of $5,000. Upon subscription ($5k/month), Richard Co will perform all related accounting functions for the small business using QuickBooks. The subscription requires a 3 vear contract. Premium Services can be purchased at a 10% discount, if included in the contract, which includes 24/7 direct hotline to senior accountants within Richard Co. The Premium Services are routinely sold at standalone prices of $50/hr. Richard estimates that a typical client will utilize this service on average of 20 hours a month. 1) Perform the 5 steps of Revenue Recognition assuming a client purchased the maximum package. Assume the estimate and actual of hours for Premium Services has no variances. 2) Record all necessary entries for the first year of the contract

Answer rating: 100% (QA)

ANSWER The following is a breakdown of the fivestep revenue recognition model 1 Determine the contract A contract is an agreement between two or more parties that establishes legally binding rights an... View the full answer