Rocky guide service provides guided 1–5 day hiking tours throughout the rocky mountains. wilderness tours hires rocky to lead various

Question

Rocky Guide Service provides guided hiking tours lasting from 1 to 5 days throughout the Rocky Mountains. Wilderness Tours hires Rocky to lead various tours that Wilderness sells. Rocky receives $2,400 per tour day, and shortly after the end of each month, Rocky learns whether it will receive a $240 bonus per tour day it guided during the previous month, contingent upon receiving an average evaluation of "excellent" from Wilderness customers. The $2,400 per day and any applicable bonus are paid in one lump sum shortly after the end of each month.
a. On July 1, based on prior experience, Rocky estimated a 30% chance of earning the bonus for July tours. It guided a total of 10 days from July 1 to July 15.
b. On July 16, after assessing its performance, Rocky revised its estimate to an 80% chance of earning the bonus for July tours. Rocky also guided customers for an additional 15 days from July 16 to July 31.
c. On August 5, Rocky learned that it did not receive an average evaluation of "excellent" for its July tours, meaning it would not receive any bonus for that month. However, it did receive all payments due for the July tours.
Required: Prepare the journal entries to record the transactions above.

Prepare Rocky's journal entry for July 15 to record revenue for tours given from July 1 to July 15. 
Prepare Rocky's journal entry for July 31 to record revenue for tours given from July 16 to July 31. 
Prepare Rocky's journal entry for August 5 to record the receipt of payment from Wilderness. 
Prepare Rocky's journal entry for August 5 to record any necessary adjustments to revenue.

Anonymous · Accepted Answer

Please see belowExplanation:1. Journal entry to record revenue from  tours from july 1 to july 15Date                  Account                            Debit                Credit 15TH July  Account Receivable               $24,000                      Service Revenue                                         $24,000working:Revenue accrued from the 10 days tour ie from  July 1 to 15=   Revenues per day x Numner of days of tours= $2,400 x 10 =$24,0002. journal entry to record revenue for tours given from July 16 - July 31Date                  Account                            Debit                 Credit 31ST July  Account Receivable               $36,000                   Bonus receivable                   $6,000                     Service Revenue                                        $42,000working:Revenue accrued from the 15 days tour ie from  July 16 to 31=   Revenues per day x Number of days of tours= $2,400 x 15=$36,000Bonus from July= Bonus gotten each day x total days guided=240 x (15 + 10 days) = 240 x 25= $60003 journal entry to record the receipt of payment from Wilderness on August 5Date                  Account                            Debit                CreditAugust 5         Cash                              $60,000                      Account receivable                                     $60,000working: Total account receivable = Amount  receivable from 1-15 july + Amount  receivable from 16-31 July= $24,000 + $36,000= $60,0004:  journal entry to record necessary adjustments to revenue. ie bonus that was expected to be received but no longer received Date                  Account                            Debit            CreditAugust                 Service Revenue       $6,000                              Bonus revenue                                $6,000

Anonymous

Rocky guide service provides guided 1–5 day hiking tours throughout the rocky mountains. wilderness tours hires rocky to lead various

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