On January 2, 2020 Geek Computers Enters into a Contract $\bullet$

question 69

Essay

On January 2, 2020 Geek Computers enters into a contract with Bison Protection, a well-established fire protection company, to upgrade and install new computers at 65 work stations. As part of the contract Geek computers also agrees to connect and network all of the computers. Contract details include the following:
$\bullet$ The total contract price is $67,500.
$\bullet$ The normal retail price of the computers is $48,750. Geek Computers would normally charge $12,500 for an installation of this size and $10,750 for networking services.
$\bullet$ The computers cost Geek Computers $500 each.
$\bullet$ The contract requires Geek Computers to deliver the computers by January 25, 2020 and have the installation and networking completed by February 15, 2020.
$\bullet$ Bison agrees to pay $45,000 upon the delivery of the computers and the balance once the installation is complete, the final payment was made February 28.
$\bullet$ Geek Computers uses the contact based approach for revenue recognition.
Instructions
a) Determine if there is a contract between Geek Computers and Bison Protection.
b) If there is a contract, record Geek Computer's entries related to these transactions.

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