[Teacherinsprout]

Speed consulting firm enters into a contract to help Burger Girl, a fast food restaurant, design a marketing strategy to compete with Carls jr. The contract spans eight months. Burger Girl promises to pay $60,000 at the beginning of each month. At the end of the contract, Speed either will give Burger Girl a refund of of $20,000 or will be entitled to an additional $20,000 bonus, depending on whether sales at Burger Girl at the year-end has increased to a target level. At the inception of the contract, Speed estimates an 80% chance that it will earn the $20,000 bonus. After four months, circumstances change and Speed revises to 60% its estimate of the chance that it will earn the bonus. At the end of the contract, Speed receives the additional consideration of $20,000. Speed accounts for this arrangement.

a) prepare a journal entry to record the revenue Speed would recognize each month for the first four months
b) Prepare a journal entry that the Speed company would make after four months to record the change in estimate associated with the like hood that additional $20,000 would be received.
c)prepare a journal entry to record the revenue that Speed company would recognize each month for the second four months.
d) Prepare a journal entry after eight months to record resolution of the uncertainty associated with receipt of the additional consideration of $20,000.