A grocery store chain and a farmer enter a forward contract for 10,000 bushels of wheat. The contract expires 3 months from today, and the store chain agrees to pay $7.50 per bushel. If the wheat price increases to $8.15 per bushel by contract expiration, calculate profit/loss for each party.
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A grocery store chain and a farmer enter a forward contract for 10,000 bushels of wheat. The contract expires 3 months from today, and the store chain agrees to pay $7.50 per bushel.
If the wheat price increases to $8.15 per bushel by contract expiration, calculate
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- On March 18, Kudos Corporation sells snack products to a retail warehouse club chain for $40,000 (cost of $24,000). The contract includes an obligation for the warehouse club to run certain advertising campaigns for the snack products in exchange for $3,200 cash from Kudos Corporation on the contract date. The comparable price for this type of advertising campaign to be conducted by a third party is $3,200. Required a. Prepare kudos' journal entry on March 18 for the product sale, the cost of the product sale, and the purchase of advertising services. b. Assume instead that Kudos sold $40,000 of product to a customer (cost of $24,000) and has agreed to pay the customer $800 in slotting fees for preferential product placement in displays. Kudos will pay the $800 fee on April 30. Prepare kudos' journal entry on March 18 for the product sale and the cost of the product sale, and then on April 30 for the payment of the slotting fee. • Note: If a line in a journal entry isn't required for…Velocity, a consulting firm, enters into a contract to help Burger Boy, a fast-food restaurant, design a marketing strategy to compete with Burger King. The contract spans eight months. Burger Boy promises to pay $54,000 at the end of each month. At the end of the contract, Velocity either will give Burger Boy a refund of $18,000 or will be entitled to an additional $18,000 bonus, depending on whether sales at Burger Boy at year-end have increased to a target level. At the inception of the contract, Velocity estimates an 80% chance that it will earn the $18,000 bonus and calculates the contract price based on the expected value of future payments to be received. At the start of the fifth month, circumstances change, and Velocity revises to 60% its estimate of the probability that it will earn the bonus. At the end of the contract, Velocity receives the additional consideration of $18,000. Required: 1. Prepare the journal entry to record revenue at the end of each month for the first…Barrios Communications is a provider of satellite television services. It will install a satellite dish free of charge for any customer that agrees to a one-year service contract at a price of $50 per month. Installation costs Barrios $150. Customers typically remain with Barrios for much longer than the one year required, an average of 10 years (i.e., 9 years beyond their contractual obligation). Barrios enters into a contract under the terms described above on January 1, 20X1. Required: 1. What amount of revenue should Barrios record related to the contract in 20X1? 2. What amount of expense related to the contract should Barrios record related to the contract in 20X1?
- Peter is a wheat farmer who is concerned with the future decrease in wheat prices. He plans to sell 250,000 bushels of wheat. Additionally, he takes a short position (sells) fifteen wheat contracts to take advantages of future increase in prices. Details of the wheat contract include: Contract size: 5,000 bushels Current (spot) price: $0.80 per bushel Futures price: $0.83 per bushel Calculate his net profit/loss if the price of wheat is $0.78 per bushel at expiration. $201,750 $198,750 $195,000 $189,750On January 1, 2019, Fulton Inc. enters into a contract with Gibson to deliver goods. Gibson pays $100,000 at the time the contract is signed, at which time the goods are transferred and Fulton’s performance obligation is complete. In addition, Gibson agrees to pay Fulton $100,000 on December 31, 2019, and December 31, 2020. If Fulton entered into a financing arrangement with Gibson it would charge an interest rate of 9%. Please assist with the journal entries. Thank you! There are 8 journal entries in all.Pita Pal sells fast-food franchises. Pita Pal receives $82,000 from a new franchisee for providing initial training, equipment, and furnishings that together have a stand-alone selling price of $82,000. Pita Pal also receives $38,100 per year for use of the Pita Pal name and for ongoing consulting services (starting on the date the franchise is purchased). Rachel became a Pita Pal franchisee on March 1, 2021, and on May 1, 2021 Rachel had completed training and was open for business. How much revenue in 2021 will Pita Pal recognize for its arrangement with Rachel?
- Sirius XM Holdings Incorporated sells a dash-top satellite radio receiver and one-year subscription for a total price of $80. By purchasing this deal, the subscriber is entitled to receive hardware (i.e., the radio), a software update that is automatically downloaded every second month to the radio, and continuous music service for one year from the date the hardware is delivered.Required:Identify the performance obligation(s) in this contract, and indicate whether the revenue should be recognized at a Point in time or Over time for each identified performance obligation. If the Performance Obligation is "No", then mark the Revenue recognized column with "Not affected".SmaGlo, Inc., a telecommunications operator, entered into a contract with Kim Dorothy on March 1,20x7. In line with the contract, Kim Dorothy subscribes for SmaGlo's monthly plan for 12 months and in retum Kim Dorothy receives a free Apple I-Phone handset from SmaGlo. Kim Dorothy will pay a monthly fee of P1,200. Kim Dorothy gets the handset immediately after contract signature. SmaGlo sells the same handsets for P2,400 and the same monthly plans for P800 per month without handset. On March 31,20x7, the amount of accounts receivable to be recorded A. 1,200 B. NoneCarmella purchased a refrigerator under a conditional sale contract that required 24 monthly payments of $70.26 with the first payment due on the purchase date. The interest rate on the outstanding balance was 15% compounded monthly. a. What was the purchase price of the refrigerator? (Do not round Intermedlate calculatlons and round your final answer to 2 declmal places.) Purchase price b. How much interest did Carmella pay during the entire contract? (Do not round Intermedlate calculatlons and round your final answer to 2 decimal places.) Interest paid 24 connect
- A contract between two parties (company X & Y) was created such that in return for services rendered, company X would provide payments of $15,000 in 8 months, $35,000 in 16 months, and $40,000 in 24 months. However, a clause was inserted in the contract that allowed company X to pay two equal lump sum payments in months 30 and 36. If interest on the contract is 6.5% compounded annually, determine the value of the lump sum payments that should be written in the contract. When entering your answer, round your values to two decimal places, and use a $ symbol as well as the correct comma separator. For example $12,345.67 Answer: AnswerOn May 10, 2025, Cullumber Co. enters into a contract to deliver a product to Oriole Inc. on June 15, 2025. Oriole agrees to pay the full contract price of $1,980 on July 15, 2025. The cost of the goods is $1,280. Cullumber delivers the product to Oriole on June 15, 2025, and receives payment on July 15, 2025. Prepare the journal entries for Cullumber related to this contract. Either party may terminate the contract without compensation until one of the parties performs. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List all debit entries before credit entries. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit SIVelocity, a consulting firm, enters into a contract to help Burger Boy, a fast-food restaurant, design a marketing strategy to compete with Burger King. The contract spans eight months. Burger Boy promises to pay $57,000 at the end of each month. At the end of the contract, Velocity either will give Burger Boy a refund of $19,000 or will be entitled to an additional $19,000 bonus, depending on whether sales at Burger Boy at year-end have increased to a target level. At the inception of the contract, Velocity estimates an 80% chance that it will earn the $19,000 bonus and calculates the contract price based on the expected value of future payments to be received. At the start of the fifth month, circumstances change, and Velocity revises to 60% its estimate of the probability that it will earn the bonus. At the end of the contract, Velocity receives the additional consideration of $19,000. Record the entry to record revenue each month for the first four months of the contract…
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