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Richard Co has successfully built a practice that services small businesses by providing accounting related services. Richard Co will provide free training and initial

 

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

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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... blur-text-image

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