Presented below are three revenue recognition situations.a. Sandhill sells goods to ATN for $920,000, payment due at delivery.b.Sandhill sells goods on account to Cullumber for $809,000, payment due in 30 days.C.Sandhill sells goods to Blossom for $522,000, payment due in two installments, the first installment payable in 18 months andthe second payment due 6 months later. The present value of the future payments is $484,700.Indicate the transaction price for each of these situations and when revenue will be recognized.(a)(b)Transaction priceRevenue will be recognizedAt deliveryAt the point of sale>+A(c)At the point of sa

To determine the transaction price and the timing of revenue recognition for each of these…

Answered: Presented below are three revenue…

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter4: Gross Income: Concepts And Inclusions

Section: Chapter Questions

Problem 21CE

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Presented below are three revenue recognition situations. a. Groupo sells goods to MTN for $1,000,000, payment due at delivery. b. Groupo sells goods on account to Grifols for $800,000, payment due in 30 days. c. Groupo sells goods to Magnus for $500,000, payment due in two installments, the first installment payable in 18 months and the second payment due 6 months later. The present value of the future payments is $464,000. Indicate the transaction price for each of these situations and when revenue will be recognized.
Presented below are three revenue recognition situations. (a) Groupo sells goods to MTN for $1,060,000, payment due at delivery. (b) Groupo sells goods on account to Grifols for $723,000, payment due in 30 days. (c) Groupo sells goods to Magnus for $458,000, payment due in two installments, the first installment payable in 18 months and the second payment due 6 months later. The present value of the future payments is $421,000. Indicate the transaction price for each of these situations and when revenue will be recognized. (a) (b) (c) Transaction Price $enter a dollar amount $enter a dollar amount $enter a dollar amount Revenue will be recognized choose when revenue will be recognized At the point of saleAt delivery choose when revenue will be recognized At the point of saleAt the time of payment choose when revenue will…
Here is the following revenue recognition situation.a. Wage Inc. sells goods to Rajab Corp for $850,000, payment due at delivery.b. Wage Inc. sells goods on account to Suro Corp for $1,050,000, payment due in 30 days.c. Wage Inc. sells goods to Syawal Corp for $480,000, payment due on two installments. Thefirst installment payable in 14 months, and the second payment due 4 months later. Thepresent value of the future payment is $445,000.Instructions:Indicate the transaction price for each of these situations and when revenue will be recognized.
Smith Corp. sells goods to Magnus for $500,000, payment due in 18 months after the goods are delivered to Magnus. The related interest is $36,000. What is the transaction price? Will Smith recognize interest expense or interest income for this transaction?
Company M uses the cost recovery method. During 19A, it sells goods with a cost of $15,000 for $25,000, payable in installments of $10,000, $10,000 and $5,000, respectively, beginning in 19A. How much profit should be recognized each year?
Bonnie Corp. sells a machine to a customer for $18,000 and uses the Installment Sales Method to account for the sale. The cost of the goods was $12,400. At the date of sale, Bonnie delivers the machine and receives $4,500, with the remainder being an installment account receivable for $13,500. How much gross profit should Bonnie recognize at the date of delivery? Do not use commas, dollar symbols (e.g. $), units or spaces in your answers. For example, one thousand five hundred and twenty-three dollars should be entered as 1523. If the Canvas system inserts a comma for you, don't worry about it.
A Crest Textiles factors $40,000 of accounts receivable on a with recourse basis. The Factor agrees to provide financing based on these receivables, but imposes a 10% one-time fee. In addition, the transferor and transferee agree that $3,000 of sales returns and allowances (adjustments) can be expected from these accounts. Further, Crest Textiles determines that this recourse obligation has a fair value of $5,000. What is the loss or expense to be recorded by the transferor?
or each of the separate revenue contract scenarios 1 through 5, (a) measure the transaction price and (b) determine whether the transaction price is fixed, variable, or some combination of both. 1. Loyola Inc. sells $70,000 of inventory during the year to customers for $140,000. Loyola Inc. accepts returns up to 3 months after the date of purchase. Loyola estimates returns to be 6% of sales. a. Transaction price Answer b. Variable consideration Answer Fixed consideration Answer 2. Nakoma Corp. sells product offering a retroactive volume discount on certain cumulative sales volumes as follows: 0 to 500 units cost $10 each; 501 to 1,000 units cost $9 each; 1,001 units and beyond cost $8 each. For Nakoma’s largest customer, Nakoma estimates the likelihood of cumulative purchases for the year as follows: 15% for 400 units, 50% for 800 units, and 35% for 1,200 units. The revenue contract stipulates that the price per unit of product will be adjusted retroactively once…
On January 2, 2020, Adani Inc. sells goods to Geo Company in exchange for a zero-interest-bearing note with face value of $11,000, with payment due in 12 months. The fair value of the goods at the date of sale is $10,000 (cost $6,000). Prepare the journal entry to record this transaction on January 2, 2020. How much total revenue should be recognized in 2020?
On July 3, 2020, Franky purchased on account specialty feeds worth P800,000 net of VAT. A wholesaler operating in the region bought for cash all of the available feeds on July 18, 2020; amount of cash received was P1,120,000 gross of VAT. Franky remitted the value added tax due to the BIR within the month. What is the VAT payable paid by Franky for the month of July? O A. 34,285.71 В. О О с 38,400 О D. 24,000
Berlin Corp. reported the following data for 2019: Total net sales made to customers were P2,000,000 in cash. Goods purchased for sale totalled P1,200,000 in cash. Beginning and ending inventory of goods for sale, respectively, were P200,000 and P300,000. 1-year advanced rent of P30,000 to apply for 2020 was received from a sublease contract. P40,000 total interest income from customers promissory note earned P30,000 of this was collected. Unrealized foreign exchange gains from foreign currency receivable totaled P60,000. Using cash basis, compute the total income subject to income tax. P990,000 P750,000 P960,000 P690,000 4. Using accrual basis, compute the total income subject to income tax. P1,060,000 P960,000 P1,000,000 P970,000
The Melrose Company uses the accrual basis to account for all sales transactions. Total sales for the current year amounted to $400,000. Of this amount, $100,000 is from sales on installment. The firm uses the installment method (i.e., cash basis) to account for the installment sale for tax purposes. Operating expenses are $220,000 for both GAAP and tax reporting. a. What is the book basis of the installment sales receivable? b. What is the tax basis of the installment sales receivable? C. Assuming a 40% tax rate, compute income tax payable, the deferred tax provision, and income tax expense for the current year. a. What is the book basis of the installment sales receivable? b. What is the tax basis of the installment sales receivable? c. Assuming a 40% tax rate, compute income tax payable, the deferred tax provision, and income tax expense for the current year. Start by determining the book and tax basis of the installment sales receivable. Then calculate the deferred tax provision.…

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