Question

Rocky Guide Service provides guided 1–5 day hiking tours throughout the Rocky Mountains. Wilderness Tours hires...

Rocky Guide Service provides guided 1–5 day hiking tours throughout the Rocky Mountains. Wilderness Tours hires Rocky to lead various tours that Wilderness sells. Rocky receives $1,000 per tour day, and shortly after the end of each month Rocky learns whether it will receive a $100 bonus per tour day it guided during the previous month if its service during that month received an average evaluation of "excellent" by Wilderness customers. The $1,000 per day and any bonus due are paid in one lump payment shortly after the end of each month. On July 1, based on prior experience, Rocky estimated there is a 30% chance it will earn the bonus for July tours. It guided a total of 10 days from July 1–July 15. On July 16, based on Rocky’s view that it had provided excellent service during the first part of the month, Rocky revised its estimate to an 80% chance it would earn the bonus for all July tours. Rocky also guided customers for 15 days from July 16–July 31. On August 5 Rocky learned it did not receive an average evaluation of “excellent” for its July tours, so it would not receive any bonus for July, and received all payment due for the July tours. Rocky bases estimates of variable consideration on the most likely amount it expects to receive. Required: 1. to 3. Prepare the journal entries to record the transactions above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

Homework Answers

Answer #1
No Date General Journal Debit Credit
1) 15-Jul Accounts receivable 10000
Service revenue 10000
2) 31-Jul Accounts receivable 15000
Bonus receivable 2500
Service revenue 17500
3) 5-Aug Cash 25000
Accounts receivable 25000
4) 5-Aug Service revenue 2500
Bonus receivable 2500
Explanation:
1) only revenue recognised for 10 days tour , no bonus recognised as chances
are less than 50%
2) revenue recognised for another 15 days , also bonus recognised for 25 days (10+15)
as chances raised to 80%
3) Basic revenue received
4) Bonus entry reversed
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Rocky Guide Service provides guided 1-5 day hiking tours throughout the Rocky Mountains. Wilderness Tours hires...
Rocky Guide Service provides guided 1-5 day hiking tours throughout the Rocky Mountains. Wilderness Tours hires Rocky to lead various tours that Wilderness sells. Rocky receives $1,700 per tour day, and shortly after the end of each month, Rocky learns whether it will receive a $170 bonus per tour day it guided during the previous month if its service during that month received an average evaluation of "excellent" by Wilderness customers. The $1,700 per day and any bonus due are...
Rocky Guide Service provides guided 1–5 day hiking tours throughout the Rocky Mountains. Wilderness Tours hires...
Rocky Guide Service provides guided 1–5 day hiking tours throughout the Rocky Mountains. Wilderness Tours hires Rocky to lead various tours that Wilderness sells. Rocky receives $2,300 per tour day, and shortly after the end of each month Rocky learns whether it will receive a $230 bonus per tour day it guided during the previous month if its service during that month received an average evaluation of "excellent" by Wilderness customers. The $2,300 per day and any bonus due are...
Rocky Guide Service provides guided 1–5 day hiking tours throughout the Rocky Mountains. Wilderness Tours hires...
Rocky Guide Service provides guided 1–5 day hiking tours throughout the Rocky Mountains. Wilderness Tours hires Rocky to lead various tours that Wilderness sells. Rocky receives $1,800 per tour day, and shortly after the end of each month Rocky learns whether it will receive a $180 bonus per tour day it guided during the previous month if its service during that month received an average evaluation of "excellent" by Wilderness customers. The $1,800 per day and any bonus due are...
P4-33. Applications of Differential Analysis Adventure Expeditions offers guided back-country hiking/camping trips in British Columbia. Adven-...
P4-33. Applications of Differential Analysis Adventure Expeditions offers guided back-country hiking/camping trips in British Columbia. Adven- ture provides a guide and all necessary food and equipment at a fee of $50 per person per day. Adven- ture currently provides an average of 600 guide-days per month in June, July, August, and September. Based on available equipment and staff, maximum capacity is 800 guide-days per month. Monthly variable and fixed operating costs (valued in Canadian dollars) are as follows: Variable Costs...
Phoebe’s Plumbing, a firm that provides plumbing services, has just completed a full year of operations...
Phoebe’s Plumbing, a firm that provides plumbing services, has just completed a full year of operations on 30 June 2020. An analysis of the firm’s records reveals the following: (i)     On 1 January, the firm purchased a new machine for $75,000. Depreciation expense for the six months ended on 30 June 2020 is $7,500. (ii)    The supplies account had a $135 debit balance on 1 July. Supplies of $545 were purchased during the year and $120 of supplies are on...
Post-Closing Trial Balance December 31, 2018 Debit Credit Cash      18,200 Accounts receivable        3,960 Supplies        1,380
Post-Closing Trial Balance December 31, 2018 Debit Credit Cash      18,200 Accounts receivable        3,960 Supplies        1,380 Prepaid insurance           750 Prepaid rent        3,800 Furniture        5,000 Accumulated depreciation, furniture           450 Equipment        8,000 Accumulated depreciation, equipment        4,000 Accounts payable        2,700 Accrued liabilities           190 Unearned service revenue        1,900 Common shares      20,000 Retained earnings      11,850 Total      41,090      41,090 PREPARE JOURNAL ENTRIES (+ADJUSTING ONES IF NEEDED) Business Activities for January, 2019 On January 4, 2019, Linda paid the outstanding accounts payable balance from December 31, 2018. On...
1-25 True or False 1. Sales revenue is an inflow of assets. 2. The three distinct...
1-25 True or False 1. Sales revenue is an inflow of assets. 2. The three distinct types of cost to a manufacturer are direct materials, direct labor, and manufacturing overhead.                       3. Sales Returns and Allowances is a contra-asset account. 4. Like sales revenue, cost of goods sold represents an inflow of assets. 5. With the periodic inventory system the inventory account is updated after each sale or purchase. 6. When merchandise is sold FOB shipping point, the buyer is responsible...
What tools could AA leaders have used to increase their awareness of internal and external issues?...
What tools could AA leaders have used to increase their awareness of internal and external issues? ???ALASKA AIRLINES: NAVIGATING CHANGE In the autumn of 2007, Alaska Airlines executives adjourned at the end of a long and stressful day in the midst of a multi-day strategic planning session. Most headed outside to relax, unwind and enjoy a bonfire on the shore of Semiahmoo Spit, outside the meeting venue in Blaine, a seaport town in northwest Washington state. Meanwhile, several members of...
Please answer the following Case analysis questions 1-How is New Balance performing compared to its primary...
Please answer the following Case analysis questions 1-How is New Balance performing compared to its primary rivals? How will the acquisition of Reebok by Adidas impact the structure of the athletic shoe industry? Is this likely to be favorable or unfavorable for New Balance? 2- What issues does New Balance management need to address? 3-What recommendations would you make to New Balance Management? What does New Balance need to do to continue to be successful? Should management continue to invest...
Delta airlines case study Global strategy. Describe the current global strategy and provide evidence about how...
Delta airlines case study Global strategy. Describe the current global strategy and provide evidence about how the firms resources incompetencies support the given pressures regarding costs and local responsiveness. Describe entry modes have they usually used, and whether they are appropriate for the given strategy. Any key issues in their global strategy? casestudy: Atlanta, June 17, 2014. Sea of Delta employees and their families swarmed between food trucks, amusement park booths, and entertainment venues that were scattered throughout what would...