Actg 351 - Ht Case Study
Autor: Nichole Stephanos • May 30, 2016 • Case Study • 2,550 Words (11 Pages) • 748 Views
NICHOLE STEPHANOS
ACTG 351, HW #1
#1
A)
| 2015 | 2016 | 2017 |
Costs Incurred to date | $ 350,000 | $ 2,500,000 | $ 4,250,000 |
Estimated Costs | $ 3,150,000 | $ 1,700,000 | $ - |
Total Est. Costs | $ 3,500,000 | $ 4,200,000 | $ 4,250,000 |
% completed | 10% | 59.52% | 100% |
|
|
|
|
Revenue | $ 400,000 | $ 1,980,800 | $ 1,619,200 |
Expenses | $ 350,000 | $ 2,230,800 | $ 1,669,200 |
Gross Profit | $ 50,000 | $ (250,000) | $ (50,000) |
Journal Entries—PLEASE SEE ATTACHED: TABLE 1
B) Recognized at a point in time: Recognized when the job is complete
| 2015 | 2016 | 2017 |
Revenue |
|
| $ 4,000,000 |
Expenses |
|
| $ 4,050,000 |
Gross Profit |
| (200,000) | $ (50,000) |
Journal Entries – PLEASE SEE ATTACHED: TABLE 2
#2
HT should recognize these transactions using the Net revenue recognition model. This is because HT is an Agent. They are just an agent because the restaurants are the primary party responsible for the actual obligation of providing the service, the meals. Also because HT does not have any inventory or credit risk by obtaining the vouchers only once customers have actually purchased them and because their only consideration is for the commissions they receive from selling the vouchers. Another reason why HT is only an agent is the fact that they do not have the discretion of setting the price, they must work together with the restaurants to determine it.
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