E 2-10 - Accounting for purchase commitments On Nov. 15, 2020, Malone Corp. entered into a commitment to purchase 200,000 units of raw material X for P40 per unit to be delivered on Mar. 15, 2021. The contract cannot be cancelled. Malone entered into this purchase commitment to protect itself against the volatility in the price of raw material X. purchase price of material X had fallen to P35 per unit. Вy Dec. 31, 2020, thе Required: Using periodic inventory system, prepare the journal entry on: 1. Nov. 15, 2020 2. Dec. 31, 2020 3. Mar. 15, 2021 if the price of the material had fallen further to P32 per unit 4. Mar. 15, 2021 if the price of the material had risen to P42 per unit

E 2-10 - Accounting for purchase commitments On Nov. 15, 2020, Malone Corp. entered into a commitment to purchase 200,000 units of raw material X for P40 per unit to be delivered on Mar. 15, 2021. The contract cannot be cancelled. Malone entered into this purchase commitment to protect itself against the volatility in the price of raw material X. purchase price of material X had fallen to P35 per unit. Вy Dec. 31, 2020, thе Required: Using periodic inventory system, prepare the journal entry on: 1. Nov. 15, 2020 2. Dec. 31, 2020 3. Mar. 15, 2021 if the price of the material had fallen further to P32 per unit 4. Mar. 15, 2021 if the price of the material had risen to P42 per unit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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?
Current Attempt in Progress Carla Vista Co. enters into a contract to sell Product A and Product B on January 2, 2023, for an upfront cash payment of $170,000. Product A will be delivered in two years (January 2, 2025) and Product B will be delivered in five years (January 2, 2028). Carla Vista allocates the $170,000 to Products A and B on a relative stand-alone selling price basis as follows. Stand-Alone Selling Prices Percentage Allocated Allocated Amounts Product A $36,000 20% $34,000 Product B 144,000 80% 136,000 $180,000 $170,000 Carla Vista uses an interest rate of 5%, which is its incremental borrowing rate.
7....Stellar Industries and Pearl Inc. enter into an agreement that requires Pearl Inc. to build three diesel-electric engines to Stellar’s specifications. Upon completion of the engines, Stellar has agreed to lease them for a period of 10 years and to assume all costs and risks of ownership. The lease is non-cancelable, becomes effective on January 1, 2020, and requires annual rental payments of $370,847 each January 1, starting January 1, 2020.Stellar’s incremental borrowing rate is 8%. The implicit interest rate used by Pearl and known to Stellar is 7%. The total cost of building the three engines is $2,362,000. The economic life of the engines is estimated to be 10 years, with residual value set at zero. Stellar depreciates similar equipment on a straight-line basis. At the end of the lease, Stellar assumes title to the engines. Collectibility of the lease payments is probable. (b) Prepare the journal entry to record the transaction on January 1, 2020, on the books of…
12 . Consider a T-bill that will have a 125 days to maturity at the time of forward contract expiration. The forward in this T-Bill is quoted at a discount of 1.24%. At expiration, the amount the long will pay the short for delivery of T-bill worth $1m par is closest to: A. $995,694.44 B. $995,753.42 C. $987,600
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QUESTION 46 On January 1, 2020, Smith Company signed a ten-year Note for the acquisition of equipment. Annual note payments of $22,000, based on an interest rate of 10% are to be made every December 31, beginning with December 2020. The present value of the minimum lease payments is $135,180. Required: Indicate the effect of the following on the company's accounting equation. Indicate each account title affected and the dollar change and whether it increased or decreased. To record the second note payment on December 31, 2021. O Increase interest expense $13,518, thereby decreasing net income, retained earnings, and cash for $13,518. O Increase interest expense $22,000, thereby decreasing net income, retained earnings, and cash for $22,000. Increase interest expense $13,500, thereby decreasing net income and retained earnings for $13,500. Decrease cash $22,000 and note payable $8,500. Increase interest expense $12,669.80, thereby decreasing net income and retained earnings for…
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On November 15, 2020, Diamond Company entered into a Problem 12-12 (IAA) On November 15, 2020, Diamond Company entered into commitment to purchase 10,000 ounces of gold 15, 2021 at a price of P310 per ounce. on February On December 31, 2020, the market price of gold is P270 Der ounce. On February 15, 2021, the price of gold is P300 per per ounce. on December 31, 2020? a. 400,000 b. 100,000 300,000 d. с. 2. What is the gain on purchase commitment to be recognized on February 15, 2021? 400,000 b. 300,000 100,000 а. с. d. 3. What amount should be debited to purchases on February 15, 2021? a. 3,000,000 b. 3,100,000 с. 2,700,000 d. 3,500,000 4. What amount should be recognized as accounts payable on February 15, 2021? a. 2,700,000 b. 3,100,000 c. 3,500,000 d. 3,000,000
Problem 21-03 (Part Level Submission) Oriole Steel Company, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2020. Annual rental payments of $45,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 7%; Oriole’s incremental borrowing rate is 9%. Oriole is unaware of the rate being used by the lessor. At the end of the lease, Oriole has the option to buy the equipment for $5,000, considerably below its estimated fair value at that time. The equipment has an estimated useful life of 7 years, with no salvage value. Oriole uses the straight-line method of depreciation on similar owned equipment.Click here to view factor tables. (a) Prepare the journal entries, that Oriole should record on December 31, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry…
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