Question
Skysong Inc., a registered broker, enters into a finders fee agreement with HOM Homes Ltd. on June 15, 2020. Skysong will find leads in the
Skysong Inc., a registered broker, enters into a finders fee agreement with HOM Homes Ltd. on June 15, 2020. Skysong will find leads in the form of buyers potentially interested in purchasing HOMs real estate holdings. Along with finding potential buyers, Skysong helps negotiate the selling price and provides advice on contract details. If and when HOM closes a sale, Skysong will be paid within 30 days of the closing date, based on the following formula: 5% of any transaction value up to and including $1 million, plus 4% of any transaction value greater than $1 million and less than and including $2 million, plus 3% of any transaction value greater than $2 million and less than and including $3 million, plus 2% of any transaction value greater than $3 million and less than and including $4 million, plus 1% of any transaction value in excess of $4 million. If Skysong is represented by another broker and this information is not shared with HOM, the fee is reduced by 50%. On September 1, 2020, HOM paid Skysong $57,000 to provide some needed cash flow for seeking out buyers. On October 15, 2020, an offer was made and accepted for a parcel of real estate at a price of $3.65 million. The transaction closed on November 1, 2020, and Skysong was paid the finders fee net of $57,000 on November 30, 2020. Determine the accounting treatment of the above events for Skysong Inc. and prepare any journal entries needed on:
June 15, 2020
September 1, 2020
October 15, 2020
November 1, 2020
November 30, 2020
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