Answered: Love Company requires advance payments… | bartleby

FINANCIAL ACCOUNTING

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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Question

Love Company requires advance payments with special orders for machinery constructed to customer specifications.
These advances are nonrefundable. Information for the current year is:
Advances from customers – January 1 P1,320,000
Advances received with orders 2,160,000
Advances applied to orders shipped 1,920,000
Advances applicable to orders cancelled 120,000
In Love Company’s December 31 statement of financial position, what amount should be reported as current liability for
advances from customers?
a. P1,440,000 b. P1,560,000 c. P1,680,000 d. P0

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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Statement: At December 31, 2021, goods costing P125,000 are in transit from a supplier. Terms of purchase of the said goods is FOB origin. The goods and the related invoice have not been received as of year-end. Question: Is the 125,000 amount mentioned in the statement a current liability or no? Why?
Akira Co. is selling sounds and lights equipment. The company's fiscal year ends on March 31. The following information relates to the obligations of the company as of March 31, 2021: Trade payables Accounts payable for suppliers, goods, and services purchases on open account amount to P1,670,000 as of March 31, 2021 before considering of the following items: On March 31, 2021, the company has a P50,000 debit balance in its accounts payable to a supplier, resulting from a P50,000 advance payment for goods ordered by the company. The balance also includes an advance payment of P20,000 made by a customer to Dell in anticipation of a purchase to be made by the customer in April 2021. Additional information: Goods were in transit to the company from a vendor on March 31, 2021. The invoice cost was P35,000. The goods were shipped FOB seller on March 29, 2021 and were received on April 4, 2021. Goods shipped FOB destination on March 21, 2021, from a vendor to the company were…
From inception of operations to December 31, 2025, Swifty Corporation provided for uncollectible accounts receivable under the allowance method. The provisions are recorded, based on analyses of customers with different risk characteristics. Bad debts written off were charged to the allowance account; recoveries of bad debts previously written off were credited to the allowance account, and no year-end adjustments to the allowance account were made. Swifty's usual credit terms are net 30 days. The balance in Allowance for Doubtful Accounts was $144,200 (Cr.) at January 1, 2025. During 2025, credit sales totaled $9,170,300. the provision for doubtful accounts was determined to be $183,406, $91,703 of bad debts were written off, and recoveries of accounts previously written off amounted to $19,570. Swifty installed a computer system in November 2025, and an aging of accounts receivable was prepared for the first time as of December 31, 2025. A summary of the aging is as follows.…

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