During 2021, Tartarus Company signed a noncancellable contract to purchase 500 sacks of rice at P900 per sack with delivery to be made in 2022. On December 31, 2021, the price of rice had fallen to P850 per sack. On May 9, 2022, Tartarus Company accepts delivery of rice when the price is P880 per sack. In December 31, 2021 income statement, what amount of loss on purchase commitment should be recognized?

During 2021, Tartarus Company signed a noncancellable contract to purchase 500 sacks of rice at P900 per sack with delivery to be made in 2022. On December 31, 2021, the price of rice had fallen to P850 per sack. On May 9, 2022, Tartarus Company accepts delivery of rice when the price is P880 per sack. In December 31, 2021 income statement, what amount of loss on purchase commitment should be recognized?

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

Use the following information for the next eight questions: On July 1, 2019, Mega Company purchased a machinery for P900,000 and incurred freight and handling charges on the machinery while in transit amounting to P45,000. The company also incurred testing costs amounting to P20,000 and sold some salvaged materials from testing for P5,000. The machinery is estimated to have a useful life of 5 years and a residual value of P30,000. The entity depreciated its machineries using the double declining balance method. On July 1, 2020, Mega Company sold the machinery in exchange for a P50,000 down payment and a 3- year, P750,000 noninterest-bearing note receivable due as follows: Date Amount Jan 1 2021 1 125,000 July 1 2021 2 125,000 Jan 1 2022 3 125,000 Jul 1 2022 4 125,000 Jan 1 2023 125,000 Jul 1 2023 125,000 P750,000 6 Total The prevailing rate for this type of note is 10%. Note: Round your final answers to two decimal places but do not round off while in the process of computing for the…
During 2021, Tartarus Company signed a noncancellable contract to purchase 500 sacks of rice at P900 per sack with delivery to be made in 2022. On December 31, 2021, the price of rice had fallen to P850 per sack. On May 9, 2022, Tartarus Company accepts delivery of rice when the price is P880 per sack. What amount of recovery of loss on purchase commitment should Tartarus recognize on May 9, 2022
56 In August 2021, Commonlo Corp. commits to selling 100 of its merchandise to M&H Co. for P30,000 (P300 per product). The merchandise is to be delivered to M&H over the next 6 months. After 60 merchandises were delivered, the contract is modified and Commonlo promises to deliver 80 more products for an additional P21,600 (P270 per station). At year-end, Commonlo delivered an additional 90 products. All sales are cash on delivery. Assume that the additional term is a prospective modification to the original contract. How much revenue will be recognized on the contract for the year 2021?
On December 28, 2021, Tristar Communications sold 19 units of its new satellite uplink system to various customers for $15,000 each. The terms of each sale were 3/15, n/30. Tristar uses the gross method to account for sales discounts. In what year will income before tax be affected by discounts, assuming that all customers paid the net-of-discount amount on January 6, 2022? By how much? in income before tax will be by
21. A promissory note which is dated January 1, 20A was received from a client for service rendered by the ML Company for P350,000. Its term is 1 year (360 days) and carries with it a 10% interest rate. On the same date, due to financial needs, the company immediately have it discounted to a financial provider at 15% discount. Compute the amount of loss if the discounting arrangement is a conditional sale. Round off final answer to the nearest peso.
Question 50 Choose the correct answer from the choices.
At Dec. 31, 2019. H&M Co. had gift certificates outstanding, which had been sold to customers during 2019 for P 100 each H& M operates on a gross margin of 60% of its sales. What amount of revenue pertaining to the 10,000 outstanding gift certificates should be deferred at Dec. 31, 2019. * A.N one B.400,000 C.600,000 D.1,000,000
Yellow Company purchases a truck on January 1, 2021. According to the contract Yellow will not make any payments in 2021, 2022 and 2023. Yellow is to make an annuity payment of $5,000 starting December 31, 2024 through December 31, 2028. Calculate the cost of the truck.
Castro Industries purchased $21,600 of merchandise on February 1, 2020, subject to a trade discount of 5% and with credit terms of 2/15, n/60. It returned $5,000 (gross price before trade or cash discount) on February 4. Castro paid one-half of the outstanding obligation on February 13. The remaining amount was paid 60 days after the date of purchase. Prepare the journal entries Castro would make for the purchase, the return, and the two payments using (1) the gross method and (2) the net method. Castro uses a periodic inventory system.
Bridgeport Inc. enters into an agreement on March 1, 2020, to sell Werner Metal Company aluminum ingots. As part of the agreement, Bridgeport also agrees to repurchase the ingots on May 1, 2020, at the original sales price of $190,000 plus 3%. (a) Prepare Bridgeport's journal entry necessary on March 1, 2020. (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 ancienter O for the amounts.) Account Titles and Explanation eTextbook and Media List of Accounts Debit Credit
During 2020, Univ Company signed a non-cancellable contract with Univy to purchase 1,000 tons of cotton at P1, 200 with delivery to be made in 2021. On December 31, 2020, the price of cotton had fallen for P1,150 per ton. The company expects delivery of cotton when the price is P1,180 per ton on April 2021. What amount of gain from recovery of loss on purchase commitment, if any, should be recognized by Univ in 2021?
Kk.303.