Prepare the journal entry on July

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Problem - On July 1, Wiggins Associates enters into a contract to provide consulting services to Pennsylvania University (PU). The contract is anticipated to last four months and is intended to achieve significant cost savings at the university. The contract stipulates that PU will pay Wiggins $40,000 at the end of each month, and, if total cost savings reach a specific target, PU will pay an additional $35,000 to Wiggins at the end of the contract. Wiggins estimates a 80% chance that cost savings will reach the target.

Assume that Wiggins estimates variable consideration as the expected value.

Required - Prepare the journal entry on July 31 to record the first month of revenue under the contract.

Reference no: EM132872545

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