During 2016, Palazzo Company signed a non-cancelable contract with Crown Milling Company to purchase 1,000, 50- kilos sacks of rice at $2,700 per sack with delivery to be made in 2017. On December 31,2016, the price had fallen to $2,680 per sack. On April 1,2017, the price per sack of rice further decreased to $2,670. 1. Assuming that the price per 50 kilos sack of rice was $2,710 on April 1,2017, how much is the recovery of loss recognised on that date? 2. In Palazzo's December 31, 2016 profit and loss, how much is reported as loss on purchase commitments?Single line text. 3. What is the amount of loss on purchase commitments recognised upon delivery of the 1,000 sacks on April 1,2017?
During 2016, Palazzo Company signed a non-cancelable contract with Crown Milling Company to purchase 1,000, 50- kilos sacks of rice at $2,700 per sack with delivery to be made in 2017. On December 31,2016, the price had fallen to $2,680 per sack. On April 1,2017, the price per sack of rice further decreased to $2,670. 1. Assuming that the price per 50 kilos sack of rice was $2,710 on April 1,2017, how much is the recovery of loss recognised on that date? 2. In Palazzo's December 31, 2016 profit and loss, how much is reported as loss on purchase commitments?Single line text. 3. What is the amount of loss on purchase commitments recognised upon delivery of the 1,000 sacks on April 1,2017?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
During 2016, Palazzo Company signed a non-cancelable contract with Crown Milling Company to purchase 1,000, 50- kilos sacks of rice at $2,700 per sack with delivery to be made in 2017. On December 31,2016, the price had fallen to $2,680 per sack. On April 1,2017, the price per sack of rice further decreased to $2,670.
1. Assuming that the price per 50 kilos sack of rice was $2,710 on April 1,2017, how much is the recovery of loss recognised on that date?
2. In Palazzo's December 31, 2016
3. What is the amount of loss on purchase commitments recognised upon delivery of the 1,000 sacks on April 1,2017?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education