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Variable considerationLO LOOn January Revis Consulting entered into a contract to
complete a cost reduction program for Green Financial over a
sixmonth period. Revis will receive $ from Green at the end
of each month. If total cost savings reach a specific target, Revis
will receive an additional $ from Green at the end of the
contract, but if total cost savings fall short, Revis will refund
$ to Green. Revis estimates an chance that cost savings
will reach the target and calculates the contract price based on
the expected value of future payments to be received.Required:Prepare the following journal entries for Revis:Prepare the journal entry on January to record the collection
of cash and recognition of the first months revenue.Assuming total cost savings exceed target, prepare the journal
entry on June to record receipt of the bonus.Assuming total cost savings fall short of target, prepare the
journal entry on June to record payment of the penalty.
