On January 2, 2024 Global Storm Computers enters into a contract with FMI Installations, a well-established electrical project management company, to upgrade and install new computers at 75 work stations. As part of the contract Global Storm also agrees to connect and network all of the computers. Contract details include the following:

The total contract price is $77,500.

The normal retail price of the computers is $48,750. Global Storm would normally charge $12,500 for an installation of this size and $10,750 for networking services.

The computers cost Global Storm $500 each.

The contract requires Global Storm to deliver the computers by January 25, 2023 and have the installation and networking completed by February 15, 2023.

FMI agrees to pay $45,000 upon the delivery of the computers and the balance once the installation is complete, the final payment was made February 28.

Global Storm uses the contact-based approach for revenue recognition.

Instructions

a) Determine if there is a contract between Global Storm and FMI. Your answer should be a full discussion about the criteria you considered, not just a yes or no answer.

b) If there is a contract, record Global Storm's entries related to these transactions.