Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Exercise 6-11 (Algo) Variable consideration - expected value; change in estimate [LO6-3, 6-6] Rocky Guide Service provides guided 1-5 day hiking tours throughout the Rocky

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Exercise 6-11 (Algo) Variable consideration - expected value; change in estimate [LO6-3, 6-6] Rocky Guide Service provides guided 1-5 day hiking tours throughout the Rocky Mountains. Wilderness Tours hires Rocky to lead various tours that Widerness sells. Rocky receives $1,600 per tour day, and shortly after the end of each month Rocky learns whether it will receive a $160 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 $1,600 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 40% 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 90% chance it would earn the bonus for July tours. Rocky also guided customers for 15 days from July 16 July 31. - On August 5 Rocky learned it did not recelve 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 expected value 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 lournal entry required" in the first account field.) Journal entry worksheet Prepare Rocky's July 15 journal entry to record revenue for tours given from: July 1 - July 15 . Journal entry worksheet Prepare Rocky's July 15 journal entry to record revenue for tours given from July 1 - July 15. Note: Enter debits before credits. Journal entry worksheet Prepare Rocky's July 31 journal entry to record revenue for tours given from July 16 - July 31 and any adjustment needed for July 1 - July 15 . Note: Enter debits before credits. Journal entry worksheet Prepare Rocky's August 5 journal entry to record the receipt of payment from Wilderness. Note: Enter debits before credits. Journal entry worksheet Prepare Rocky's August 5 journal entry to record any necessary adjustments to revenue. Note: Enter debits before credits

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting

Authors: David Spiceland, James Sepe, Mark Nelson, Wayne Thomas

8th edition

978-1259997525, 1259997529, 978-1259548185

More Books

Students also viewed these Accounting questions

Question

What are the steps that the EEOC uses once a charge is filed?

Answered: 1 week ago

Question

What would you do?

Answered: 1 week ago