Home Products Inc. (HPI) entered into a contract on June 30, Year 1, to buy 750,000 pounds of aluminum siding on September 30, Year 1, at a price of $18.25 a pound The company's troasurer simultaneously took a short position in a forward contact by agreeing to sell 750,000 pounds of aluminum at a price of $16 50 a pound on September 30, Year 1. Assume the following prices for aluminum siding and the aluminum forward contract. June 30 Year 1 September 30 Year 1 Aluminum siding / lb. $18.25 $17.95 Aluminum forward/Ib $16.50 $16.32 Based on the above what is the earnings effect of the aluminum siding purchase commitment with the corresponding fair value hedge at the September 30, Year 1 end?
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- On January 31, O’Malley Company contracted to have two products built by Taylor Manufacturing for a total of P185,000. The contract specifies that payment will only occur after both products have been transferred to O’Malley Company. O’Malley determines that the standalone prices areP100,000 for Product 1 and P85,000 for Product 2. On August 1, when Product1 has been transferred, the journal entry to record this event include a:a. Debit to Contract Assets for P85,000b. Debit to Contract Assets for P100,000 explain your answerOn January 1, 2020, Gordon Co. enters into a contract to sell a customer a wiring base and shelving unit that sits on the base in exchange for $3,000. The contract requires delivery of the base first but states that payment for the base will not be made until the shelving unit is delivered. Gordon identifies two performance obligations and allocates $1,200 of the transaction price to the wiring base and the remainder to the shelving unit. The cost of the wiring base is $700; the shelves have a cost of $320. Instructions a. Prepare the journal entry on January 1, 2020, for Gordon. b. Prepare the journal entry on February 5, 2020, for Gordon when the wiring base is delivered to the customer. c. Prepare the journal entry on February 25, 2020, for Gordon when the shelving unit is delivered to the customer and Gordon receives full payment.Sandhill Company sells goods that cost $275,000 to Indigo Company for $440,000 on January 2, 2020. The sales price includes an installation fee, which is valued at $41,400. The fair value of the goods is $408,600. The goods were delivered on March 1, 2020. Installation is considered a separate performance obligation and was completed on June 18, 2020. Under the terms of the contract, Indigo Company pays Sandhill $260,000 upon delivery of the goods and the balance at the completion of the installation.
- On November 1, 20x5, GVF entered into a contract to buy a P225,000 machine from JDH. The contract requires GVF to pay P225,000 in advance on November 1, 20x5. The machine costs P165,000 and was delivered on November 30, 20x5. The journal entry by GVF for the delivery of the equipment will include:Ivanhoe Company sells goods that cost $250,000 to Bridgeport Company for $400,000 on January 2, 2020. The sales price includes an installation fee, which is valued at $41,000. The fair value of the goods is $369,000. The goods were delivered on March 1, 2020. Installation is considered a separate performance obligation and was completed on June 18, 2020. Under the terms of the contract, Bridgeport Company pays Ivanhoe $261,000 upon delivery of the goods and the balance at the completion of the installation. Using the five-step process for revenue recognition, determine when and how much revenue would be recognized by Ivanhoe. Assume IFRS is followed. (Round percentage allocations to 2 decimal places, 15.25 and final answers to 0 decimal places, e.g. 5,275.) Performance Obligation When? How much? Deliver goods choose a transaction date January 2, 2020March 1, 2020June 18, 2020 $enter a…Sunland Company sells goods that cost $300,000 to Marigold Company for $400,000 on January 2, 2020. The sales price includes an installation fee, which is valued at $36,900. The fair value of the goods is $373,100. The goods were delivered on March 1, 2020. Installation is considered a separate performance obligation and was completed on June 18, 2020. Under the terms of the contract, Marigold Company pays Sunland $254,000 upon delivery of the goods and the balance at the completion of the installation. Using the five-step process for revenue recognition, determine when and how much revenue would be recognized by Sunland. Assume IFRS is followed. (Round percentage allocations to 2 decimal places, 15.25 and final answers to 0 decimal places, e.g. 5,275.) Performance Obligation When? How much? Deliver goods choose a transaction date January 2, 2020March 1, 2020June 18, 2020 $enter a dollar…
- On January 1, 2025, Cullumber Co. enters into a contract to sell a customer a wiring base and shelving unit that sits on the base in exchange for $5,000. The contract requires delivery of the base first but states that payment for the base will not be made until the shelving unit is delivered. Cullumber identifies two performance obligations and allocates $1,750 of the transaction price to the wiring base and the remainder to the shelving unit. The cost of the wiring base is $850; the shelves have a cost of $490. (a) Prepare the journal entry on January 1, 2025, for Cullumber. (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 and enter O for the amounts. List debit entry before credit entry.) Date January 1, 2025 Account Titles and Explanation eTextbook and Media List of Accounts Debit CreditOriole Company sells goods that cost $320,000 to Sheffield Company for $435,000 on January 2, 2020. The sales price includes an installation fee, which is valued at $35,600. The fair value of the goods is $409,400. The goods were delivered on March 1, 2020. Installation is considered a separate performance obligation and was completed on June 18, 2020. Under the terms of the contract, Sheffield Company pays Oriole $257,000 upon delivery of the goods and the balance at the completion of the installation. Questions in pictures.Oriole Company sells goods that cost $290,000 to William Company for $445,000 on January 2, 2023. The sales price includes an installation fee, which is valued at $36,400. The fair value of the goods is $418,600. The goods were delivered on March 1, 2023. Installation is considered a separate performance obligation and was completed on June 18, 2023. Under the terms of the contract, William pays Oriole $265,000 on delivery of the goods and the balance at the completion of the installation. (a) Using the five-step process for revenue recognition, determine when and how much revenue would be recognized by Oriole. Assume IFRS is followed. (Round percentage allocations to 2 decimal places, 15.25% and final answers to O decimal places, e.g. 5,275.) Performance Obligation Deliver goods Installation Total eTextbook and Media List of Accounts Save for Later When? $ tA $ How much? Attempts: 0 of 3 used Submit Answer
- On January 1, 20X1, ABCY Agency enters into a contract for the construction of its new building. The contractprice for the construction amounted to P1,000,000. The contract is subject to a 10% retention fee. The contractorpaid P100,000 as a bond for the construction of the building. The agency also paid a 20% down payment. OnJuly 31, 20X1, the building is 60% complete and the agency receives its corresponding progress billing. Thefollowing day, the company paid the said billing. The next billing is on December 1, in which the building hasbeen fully constructed. In the following days, the building has been turn-over to the agency. Assume that theconstruction is subject to a 7% withholding tax. Required: Prepare the necessary entries to be made by the agency for the construction of the buildingCass Company enters into a contract with Dearborn Inc. to sell it $50,000 of goods with delivery on May 10, 2019. Cass manufactured the goods at a cost of $33,000. The contract is signed on April 15, 2019, at which time Dearborn pays Cass $25,000. Cass delivers the goods on May 10, 2019, and Dearborn pays the final $25,000 on that date. Required: 1. What is the transaction price? 2. Prepare Cass’s journal entries related to the contract with Dearborn.Cullumber Company sells goods on credit that cost $306,500 to Gary Company for $400,500 on January 2, 2025. The sales price includes an installation fee, which has a standalone selling price of $47,000. The standalone selling price of the goods is $353,500. The installation is considered a separate performance obligation and is expected to take 6 months to complete. (a) Prepare the journal entries (if any) to record the sale on January 2, 2025. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Jan. 2, 2025 Account Titles and Explanation Debit Credit