SoccerHawk Merchandise Inc. enters into a 6-month contract to sell soccer balls to City Soccer. The contract contains the following price scale:Sales VolumePrice per Soccer BallFirst 300 soccer balls sold$22Next 200 soccer balls sold19Next 250 soccer balls sold17Additional soccer balls sold15 On the date the contract is signed, SoccerHawk estimates based on past experience that there is a 20% chance it will sell 450 soccer balls, a 45% chance it will sell 600 soccer balls, and a 35% chance it will sell 800 soccer balls.The company sells the following soccer balls during the 6-month contract: Number of Soccer Balls Month 1155 Month 260 Month 3125 Month 475 Month 585 Month 660 Total sales560balls Required:1. On the date that the contract is signed should SoccerHawk make a journal entry? Why or why not?2. Determine the transaction price that SoccerHawk should use when recording monthly revenue.3. Prepare the journal entries for SoccerHawk assuming that City Soccer pays the amount due at the end of each month based on the sales to date.
SoccerHawk Merchandise Inc. enters into a 6-month contract to sell soccer balls to City Soccer. The contract contains the following price scale:
Sales Volume
Price per Soccer Ball
First 300 soccer balls sold
$22
Next 200 soccer balls sold
19
Next 250 soccer balls sold
17
Additional soccer balls sold
15
On the date the contract is signed, SoccerHawk estimates based on past experience that there is a 20% chance it will sell 450 soccer balls, a 45% chance it will sell 600 soccer balls, and a 35% chance it will sell 800 soccer balls.
The company sells the following soccer balls during the 6-month contract:
Number of Soccer Balls
Month 1
155
Month 2
60
Month 3
125
Month 4
75
Month 5
85
Month 6
60
Total sales
560
balls
Required:
1.
On the date that the contract is signed should SoccerHawk make a
2.
Determine the transaction price that SoccerHawk should use when recording monthly revenue.
3.
Prepare the journal entries for SoccerHawk assuming that City Soccer pays the amount due at the end of each month based on the sales to date.
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