Kikiam Company sells equipment service contracts that cover a two-year period. The sales price of each contract is P4,000. Kikiam Company’s past experience shows that of the total pesos spent for repairs in service contracts, 40% in incurred evenly during the first contract year and 60% evenly during the second contract year. Kikiam Company sold 1,500 contracts evenly throughout 2020 and 900 contracts evenly throughout 2021. How much should Kikiam Company report as contract service revenue for the year ended December 31, 2021?

Kikiam Company sells equipment service contracts that cover a two-year period. The sales price of each contract is P4,000. Kikiam Company’s past experience shows that of the total pesos spent for repairs in service contracts, 40% in incurred evenly during the first contract year and 60% evenly during the second contract year. Kikiam Company sold 1,500 contracts evenly throughout 2020 and 900 contracts evenly throughout 2021. How much should Kikiam Company report as contract service revenue for the year ended December 31, 2021?

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

West Oil Company produced 12,000 barrels of oil in May that is sold in July at$55/bbl. The expected selling price was $50/bbl. The purchaser will pay the royalty owner and the production taxes. The production tax rate is 6% and the royalty interest is 1/8. West’s manager recorded $600,000 as oil revenue and $36,000 as production tax expense and tax payable at time of the sale. The CEO of West Oil Company wants you to review the given numbers and provide the necessary entries and calculations at (a) time of production and (b) at time of sale. In addition, he wants to know which accounting principle did you apply in parts (a) and (b)? how the application of this principle is different in the oil and gas sector? Explain your answer.
Moyas Corporation sells a single product for $20 per unit. Last year, the company's sales revenuewas $300,000 and its net operating income was $24,000. If fixed expenses totaled $96,000 for theyear, the break-even point in unit sales was:A) 12,000 units B) 14,100 units C) 9,900 units D) 15,000 units
Milotic Corporation sells a single product for ₱25 per unit. Last year, the company's sales revenue was ₱245,000 and its net operating income was ₱29,250. If fixed expenses totaled ₱81,000 for the year, the break-even point in unit sales was _____________ units
NAPAPALUNOK AKO AS OF THE MOMENT INC. sells 3-year service contracts for air conditioning units for P1,500 each. Sales of service contracts are made evenly throughout each year. The company estimates that 15% of repairs are done in the first year from the date of sale, 35% in the second year, and 50% in the third year. Service contracts sold are as follows. How much is the unearned revenue from service contracts as of December 31, 2019? Use the information given. How much is the unearned revenue from service contracts as of December 31, 2020? a. P4,657,125 b. P3,468,750 c. P2,475,000 d. P1,237,500
A manufacturer has a production facility that requires 19,111 units of component JY21 per year. Following a long-term contract, the manufacturer purchases component JY21 from a supplier with a lead time of 6 days. The unit purchase cost is $12.8 per unit. The cost to place and process an order from the supplier is $113 per order. The unit inventory carrying cost per year is 20 percent of the unit purchase cost. The manufacturer operates 250 days a year. Assume EOQ model is appropriate. What is the optimal total annual inventory and purchase cost for the manufacturer? Use at least 4 decimal places.
Kling Inc. has only two retail and two wholesale customers. Information relating to each customer for 2020 follows: (Click the icon to view the customer-level operating income.) (Click the icon to view the data.) Kling's annual distribution-channel costs are $32,000 for wholesale customers and $13,000 for retail customers. The company's annual corporate costs are $45,000. There is no cause-and-effect or benefits-received relationship between any cost-allocation base and corporate-sustaining costs. That is, Kling could save corporate-sustaining costs only if the company completely shuts down. Requirement Prepare a customer-cost hierarchy report. First, determine the formula and then enter the amounts to calculate the total customer costs for each customer. (Abbreviations used: W. = West; E. = East; Dist. = Distribution; oper. = operating; inc. = = income.) W. Region E. Region Stock Inc. Darby Corp + + + || || Total customer-level costs
The following information is given to you about a manufacturing business: The days sale of inventory, DSI - 44 days The days sale outstanding. DSO = 38 days The days payables outstanding. DPO = 53 days The markup policy aplies 20% on cost to determine the sale price of a piece of inventory. All sales are credit sales; vendors also supply on credit basis. The operating capital is borrowed at an interest rate of 37% and the annual days of operations is 346. (1) The cash conversion cycle, CCC - (2) The annual rate of return on capital AFTER interest is days (Round TWO places of decimal) % (Round TWO places of decimal)
Camp Corporation produces a single product that it currently sells for P10. Fixed expenses are P120,000 for the year and variable expenses are P6 per unit. In addition, Camp’s salespersons are paid a commission of 10% of their sales.A customer has just approached Camp to make a special, one-time purchase of 10,000 units. These units would not be sold by the salespeople, and therefore no commission would have to be paid. The price Camp would have to charge on this special order to earn an additional profit of P40,000 is: P9.00 per unit P10.00 per unit P5.00 per unit P11.20 per unit
Selling, general, and administrative costs totaled $20 million, all on a short-term credit basis with vendors. We paid $19 million (cash) in outstanding accounts payable during the quarter. What are the journal entries?
Travel Co. ordered parts costing 50,000 Foreign Currency Units (FCU) from a foreign supplier on March 15 when the spot rate was $0.98 per FCU. A one-month forward contract was signed on that date to purchase 100,000 FCU at a forward rate of $0.99 per FCU. On March 31, the forward rate was $1.01. On April 14, when the parts were received and payment was made, the spot rate was $1.03 per FCU. At what amount should inventory be reported? $50,500 O $49,500 $50,000 $49,000 $51,500
Faber Manufacturing, Inc., of St. Paul, Minnesota has an economic order quantity considering backordering of 763, a maximum backordering quantity in units of 480, annual holding cost/unit = $3.5; lead time = 1.4 month (the firm operates 12 months per year). If the firm's customers do not object to backordering and each unit backordered costs $ 4.5/year, then: What is the maximum inventory level?