Company Zumba delivers goods to Customer Yuppie on 1 January 2018. The agreement between the two parties states that Customer Yuppie pays for the goods in two instalments, the first (£10,000) being paid on delivery and the second (£5,000) being paid in three years from the delivery date. The goods are transferred to the control of Customer Yuppie at the date of delivery. REQUIRED i) Present the journal entries for Zumba at the delivery date. (Assume that Company Zumba determines that the discount rate for imputing interest to the transaction is 10%.) ii) Present the journal entries for Zumba on 31 December 2018. iii) Present the journal entries for Zumba at the delivery date if the control of the asset has not been transferred at the date of delivery. Assume 10% as the discount rate, if necessary.

Company Zumba delivers goods to Customer Yuppie on 1 January 2018. The agreement between the two parties states that Customer Yuppie pays for the goods in two instalments, the first (£10,000) being paid on delivery and the second (£5,000) being paid in three years from the delivery date. The goods are transferred to the control of Customer Yuppie at the date of delivery. REQUIRED i) Present the journal entries for Zumba at the delivery date. (Assume that Company Zumba determines that the discount rate for imputing interest to the transaction is 10%.) ii) Present the journal entries for Zumba on 31 December 2018. iii) Present the journal entries for Zumba at the delivery date if the control of the asset has not been transferred at the date of delivery. Assume 10% as the discount rate, if necessary.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On June 1 Hammer Company purchased inventory from a foreignsupplier at a price of 75,000 FCU (FCU is “foreign currency units”)Hammer will make payment in three months on September 1.On June 1, Hammer entered into a forward contractmaturing on September 1 as a fair value hedgeof its FCU lliability.Prepare all journal entries, including adjusting entries, to recordthe transaction and the forward contract.Date Spot rate Forward rate*June 1 $0.80 $0.85June 30 $0.83 $0.84Sept. 1 $0.86*Forward rate is for a contract written on June 1 to mature on September 1.(Disregard the impact of any interest factor or discount rate.) first entry is no entry. just a memo.
a company signs a contract with another party to transaction at a specific rate for 180 days into the future. the exchange rate used is the
On January 5, 2019, our company receives a nonbinding purchase order for sale of merchandise to a customer in Slovakia, with delivery of the merchandise scheduled for June 30, 2019. The customer preliminarily agreed to pay €650,000 for the merchandise, and payment is due from the customer upon delivery. On January 5, 2019, our company also purchases an option that gives our company the right to sell (i.e., put) €650,000 on any date until June 30, 2019 (i.e., it is an “American-style” option) for $1.28:€1 (i.e., the spot rate on January 5, 2019). On January 5, 2019, the fair value of the option (i.e., the option premium) is $19,500. In addition, our company elected to immediately include in the determination of net income all of the change in option value attributable to factors excluded from the assessment of hedge effectiveness (i.e., the non-intrinsic-value components, like time value). The relevant exchange rates and related balances for the period from January 5, 2019, to June 30,…
Presented below are three revenue recognition situations. (a) Groupo sells goods to MTN for $1,060,000, payment due at delivery. (b) Groupo sells goods on account to Grifols for $723,000, payment due in 30 days. (c) Groupo sells goods to Magnus for $458,000, payment due in two installments, the first installment payable in 18 months and the second payment due 6 months later. The present value of the future payments is $421,000. Indicate the transaction price for each of these situations and when revenue will be recognized. (a) (b) (c) Transaction Price $enter a dollar amount $enter a dollar amount $enter a dollar amount Revenue will be recognized choose when revenue will be recognized At the point of saleAt delivery choose when revenue will be recognized At the point of saleAt the time of payment choose when revenue will…
Journal entries for an account payable denominated in Mexican Pesos ($US weakens and strengthens) Assume that your company purchases inventories from a Mexican supplier on December 15. The invoice specifies that payment is to be made on March 15 in Mexican Pesos (Peso) in the amount of 350,000 Pesos. Your company operates on a calendar year basis. Assume the following exchange rates: December 15 $0.046:1 Peso December 31 $0.053:1 Peso March 15 $0.050:1 Peso Prepare the journal entries to record the purchase (assume perpetual inventory accounting), the required adjusting entry at December 31, and the payment on March 15. General Journal Date Description Debit Credit Accounts payable Accounts payable Dec 15 Inventory Dec 31 Foreign currency transaction loss Mar 15 Accounts payable ÷ 16,100 0 0 16,100 2,450 0 0 2,450 28,000 × 0 Foreign currency transaction gain 0 10,500 x Cash 0 17,500
Company X orders raw materials for EUR 1,000 and manages to obtain a discount of 15% from one of its suppliers. Once raw materials are received, defaults are noted by the warehouse manager. Company X intends a lawsuit against its supplier. Company C's lawyer estimates that Company C might be entitled to receive EUR 200. Decision from the court: the supplier needs to grant a rebate of EUR 150. Prepare the accounting journal entries for the purchase, for the suit and the rebate at the level of Company C.
Icebreaker Company (a U.S.-based company) purchases materials from a foreign supplier on December 1, 2020, with payment of 23,000 dinars to be made on March 1, 2021. The materials are consumed immediately and recognized as cost of goods sold at the date of purchase. On December 1, 2020, Icebreaker enters into a forward contract to purchase 23,000 dinars on March 1, 2021. Relevant exchange rates for the dinar on various dates are as follows: Date Spot Rate Forward Rate(to March 1, 2021) December 1, 2020 $ 4.10 $ 4.175 December 31, 2020 4.20 4.300 March 1, 2021 4.35 N/A a-1. Assuming that Icebreaker designates the forward contract as a cash flow hedge of a foreign currency payable, prepare journal entries for the import purchase and foreign currency forward contract in U.S. dollars. a-2. What is the impact on 2020 net income? a-3. What is the impact on 2021 net income? a-4. What is the impact on net income over the two accounting periods?…