Revenue Recogaition $-$ Graded Assignment

Questian $1$:

On Jamuary $31,2023,$ Jones & Hill, u comsulting firm, entered a contruct to help Dr$.$ Lul.u L$.$ove, a local pediatric denal provider, design a marketing stralegy to compec with Gold Tooth Denial. The contracl spans ten monise. Dr$.$ I.ove promises to pay $$105,000$ at the end of each month starting in Febraary,

At the end of the contract. Jones & Hill either will give Dr$.$ Love a refund of $$200,000$ or will be entitled to an additional $$200,000$ bonus, depending on whether services at Dr$.$ Love's practice at year$-$end have increased to a target level.

At the inception of the contract, Jones & Hill estimates a $75\%$ chance that it will earn the $$200\mathrm{.}000$ bonus and calculates the coniract price based on the expected value of future payments to be reccived.

At the beginning of the fifl month and affer recording the May $3$ist entry, circumstances change, and Jones & Hill revises to $60\%$ its estimate of the probability that it will eam the bonus. Assume Jones & Hill has an April ${30}^{th}$ year$-$end.

Required $($Show your work to support anounts and do not round, show two decinal places unless the calculated amount is a whole dollar$)$:

Record the joumal entry necessary on February $28,2023.$

Record the adjusting entry on June ist to adjust the bonus receivable and revervue based on the revised estimate.

Record the new journal eniry on June $30,2023$

Record the entry on November $30,2023,$ assuming Jones & Hill receive the bonus.

Record the entry on November $30,2023,$ assuming Jones & Hill do not receive the bonus.

After all entries have been recorded, indicate the total revenuc recognized under each scenario and explain why this makes sense.

Indicate amounts that would be reported by Jones & Hill on April $30,2023$ on the Balance sheet and Income statement.