Accounting for Special Transactions On January 1, 2019, Castrano enters into a non-cancellable contract with Recio for the sale of an excavator for P700,000. The excavator will be delivered to Recio on April 1, 2019. The contract requires Recio to pay the P700,000 in advance on February 1, 2019 and Recio makes the payment on March 1, 2019.
Q: NOREEN INC, a truck dealer, sells a truck on January 1, 2019, to MENDOZA INC for P3,000,000. NOREEN…
A: Given : NOREEN INC sells a truck MENDOZA INC = P3,000,000 NOREEN agrees to repurchase the truck =…
Q: On January 1, 2019, Carson Inc sold used equipment with a cost of S15,000 and a carrying amount of…
A: ANSWER On January 1, 2019, Carson Inc sold used equipment with a cost of S15,000 and a…
Q: NOREEN INC, a truck dealer, sells a truck on January 1, 2019, to MENDOZA INC for P3,000,000. NOREEN…
A: An individual or an organization can borrow from a bank or lenders which will include an interest…
Q: Electro Company gives warranties at the time of sale to purchasers of its product. The entity…
A: A warranty refers to a written guarantee which is issued to a purchaser by the manufacturer of a…
Q: JJJ Company insured the life of its president for P2,000,000. The entity being the beneficiary of an…
A: SOLUTION- Insurance expenses are incurred by the policyholder.
Q: On August 1, 2019, Pereira Corporation has sold 1,600 Wiglows to Mendez Company at $450 each. Mendez…
A: Unearned warranty revenue on December 31, 2019 = $19,200*5/12…
Q: On January 2, 2020, Culver Company sells production equipment to Fargo Inc. for $ 48,000. Culver…
A: Equipment has a 2-year warranty assurance. So the estimated warranty for 2021 will also be recorded…
Q: On January 2, 2020, Crane Company sells production equipment to Fargo Inc. for $46,000. Crane…
A: Journal: Recording of a business transactions in a chronological order.
Q: On January 1, 2020, Happy Inc. sold a hot tub to Monica, receiving a two-year, noninterest-bearing…
A:
Q: On May 1, 2020, Splish Company enters into a contract to transfer a product to Eric Company on…
A: The journal entries are prepared to keep the record of day to day transactions of the business.
Q: On May 1, 2020, Marin Inc. entered into a contract to deliver one of its specialty mowers to…
A: DATE PARTICULARS DEBIT CREDIT a) May 1, 2020 No entry is required as a contract was…
Q: On January 1, 2019, Crouser Company sold land to Chad Company, accepting a 2-year, $150,000,…
A: Prepare journal entry.
Q: On May 10, 2020, Vaughn Co. enters into a contract to deliver a product to Greig Inc. on June 15,…
A: The journal entries are prepared to keep the record of day to day transactions of the business.
Q: On November 1, 2019, Gerakos Corporation sold software and a six-month technical support contract to…
A: Calculate the sales price of software:
Q: On January 1, 2018, an entity enters into a contract to transfer Products C and D to a customer in…
A: Contract liability: When the entity obtains a certain amount of consideration for the goods or…
Q: On January 2, 2020, Crane Company sells production equipment to Fargo Inc. for $46,000. Crane…
A: Note: Amount for warranty services is not given separatly in the question. So we are taking the…
Q: Webb Corporation purchased equipment from Shaw Corporation on January 1, 2019. Shaw accepted a…
A: Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money…
Q: On July 1, 2020, Splish Inc. made two sales. 1. It sold land having a fair value of $909,120 in…
A: Journal Entry is the entry made to record the transactions which have occurred in the books of…
Q: What amount should be reported as warranty liability as of December 31, 2019?
A: Whenever a company makes sales with a warranty, then the company needs to recognize warranty…
Q: On May 10, 2020, Marigold Co. enters into a contract to deliver a product to Greig Inc. on June 15,…
A: The primary reporting of transactions in the books of accounts can be made by recording journal…
Q: On May 1, 2020, Indigo Inc. entered into a contract to deliver one of its specialty mowers to…
A: Journal entry record the financial transactions. In case money is received in advance, it is…
Q: Cass Company enters into a contract with Dearborn Inc. to sell it $50,000 of goods with delivery on…
A: 1) Meaning of Transaction Price Transaction Price is the Amount of consideration that company…
Q: Ping Inc. granted a franchise to Tito Inc. to operate its registered business of barbershop. The…
A: GIVEN Ping Inc granted a franchise to Tito Inc to operate its registered business of barbershop.…
Q: On January 1, 2019, Lala Company received an P800,000, 8%, 2 year note from Move Corporation as…
A: Annual installment = Total amount to be collected / no. of installment = 600000/3 = P200,000
Q: On December 31, 2019, Carboro Textile Company had shortterm debe in the form of notes payable…
A: Balance sheet shows the financial position of the company.
Q: n December 15, 2018, Rigsby Sales Co. sold a tract of land that cost $3,900,000 for $5,000,000.…
A: Computation of gross profit ratio :- Gross profit ratio= (Sales-costs)/ Sales…
Q: On May 1, 2020, Nash Inc. entered into a contract to deliver one of its specialty mowers to Kickapoo…
A: Date Particulars Debit Credit May 1, 2020 No entry May 15, 2020 Cash $889 Unearned…
Q: Tran Company acquired an equipment from a manufacturer on June 30, 2018 and signed a $540,000, 18…
A: Compute the amount of interest.
Q: On July 1, 2019, SEK Company sold goods to Grant Company for R$900,000 in exchange for a 4-year,…
A: Revenue is the term in accounts which is defined as the income or increase in net assets, which an…
Q: On January 1, 2020, ABC enters into a contract with a customer to transfer a license for a fixed fee…
A:
Q: NOREEN INC, a truck dealer, sells a truck on January 1, 2019, to MENDOZA INC for P3,000,000. NOREEN…
A: The interest expense for Noreen Inc. would be computed on the compounded value of the asset's…
Q: On November 1, 2021, Taylor signed a one-year contract to provide handyman services on an as-needed…
A: Note: Taylor should recognize revenue in 2021 for 2 months of the contract because no certainty…
Q: Prepare the journal entry to record this transaction on January 2, 2020, and on December 31, 2020…
A:
Q: ROSE Company entered into a lawsuit on December 20, 2021
A: Lets 1st perceive the which means of current and non-current liability. As per IAS one "Presentation…
Q: Zagat Inc. enters into an agreement on March 1, 2020, to sell Werner Metal Company aluminum ingots.…
A: a. Date Accounts Titles and Explanation Debit Cedit March 1, 2020 Cash $200,000…
Q: n 2019, Bright Inc. sold its parking lot for P2,400,000 payable on installment. The lot was…
A: We know that in Installment method profit is defer till the time we received actual cash from sale…
Q: amount should the current liability be presented in the statement of financial position?
A: Current liability is the amount of liability, the payment of which is due within a year.
Q: On January 2, 2020, Whispering Company sells production equipment to Fargo Inc. for $ 48,000.…
A: Warranty expense of $930 incurred in 2020 is related to 2020 sales, so it is the expense of 2020.…
Q: On December 31, 2019, Entity A enters into a contract with Customer B to transfer a license for a…
A: A franchise agreement seems to be a legal contract that establishes a franchise connection between a…
Q: On January 1, 2019, Fulton Inc. enters into a contract with Gibson to deliver goods. Gibson pays…
A: The journal entries for Fulton Inc. are shown as below: Working Notes: Computation of…
Q: Carla Vista Company purchased equipment on account on September 3, 2019, at an invoice price of…
A: Calculate the cost of equipment.
Q: On January 30, 2021, XYZ Corporation, a non-VAT registered company, purchased from ABC Corporation,…
A: SOLUTION- EXPLANATION- VAT RATE = 12% SALES (A) 280000 OUTPUT VAT (B)= (280000 / 1.12 )…
Q: NOREEN INC, a truck dealer, sells a truck on January 1, 2019, to MENDOZA INC for P3,000,000. NOREEN…
A: Imputed interest: It is the estimated interest rate on debt other than established interest rate…
Q: On May 10, 2020, Cosmo Co. enters into a contract to deliver a product to Greig Inc. on June 15,…
A: Journal Entry: It is a systematic record of a financial transaction of a company recorded in…
Q: JJ Company insured the life of its president for P2,000,000. The entity being the beneficiary of an…
A: Insurance expenses are incurred by the policyholder.
Q: Company gives warranties at the time of sale to purchasers of its product. The entity undertakes to…
A: Accounting is essential to operating a company since it allows businesses to track income and…
Q: On January 1, 2021, Crucell N.V. sold an aeroengine along with a 4 year maintenance agreement to…
A: The contracts are negotiated as a single bundle or package with a single business objective
Q: On January 2, 2020, Crane Company sells production equipment to Fargo Inc. for $46,000. Crane…
A: Note: Amount for warranty services is not given separatly in the question. So we are taking the…
Q: On January 2, 2020, Grando Company sells production equipment to Fargo Inc. for $50,000. Grando…
A: a. Prepare the journal entry to record this transaction on January 2, 2020, and on December 31, 2020…
Q: NOREEN INC, a truck dealer, sells a truck on January 1, 2019, to MENDOZA INC for P3,000,000. NOREEN…
A: An individual or an organization can borrow from a bank or lenders which will include an interest…
Accounting for Special Transactions
On January 1, 2019, Castrano enters into a non-cancellable contract with Recio for the sale of an excavator
for P700,000. The excavator will be delivered to Recio on April 1, 2019. The contract requires Recio to pay the P700,000 in advance on February 1, 2019 and Recio makes the payment on March 1, 2019.
On January 1, 2019, the amount of accounts receivable to be recorded:
a. None b. P350,000 c. P700,000 d. P1,400,000
5. On January 1, 2019, the amount of revenues to be recorded:
a. None b. P350,000 c. P700,000 d. P1,400,000
Step by step
Solved in 2 steps
- On October 1, 2019, Grahams WeedFeed Inc. signs a contract to maintain the grounds for BigData Corp. The contract ends on March 31, 2020, and has a monthly payment of 3,200. The contract does not include any stipulations for additional periods. On June 1, Grahams WeedFeed and BigData sign a new 12-month contract that is retroactive to April 1, 2020. The monthly fee for the new contract is 4,000 per month and is also retroactive to April 1, 2020. During April and May of 2020, while the new contract was being negotiated, Grahams Weed Feed continued to maintain the grounds, and BigData continued to pay 3,200 per month. BigData was satisfied with Grahams WeedFeeds performance, and the only issue during negotiations was the monthly fee. Required: Determine if a valid contract exists between Grahams WeedFeed and BigData during April and May 2020.On January 1, 2019, Mopps Corp. agrees to provide Conklin Company 3 years of cleaning and janitorial services. The contract sets the price at 12,000 per year, which is the normal standalone price that Mopps charges. On December 31, 2020, Mopps and Conklin agree to modify the contract. Mopps reduces the fee for the third year to 10,000, and Conklin agrees to a 4-year extension that will extend services through December 31, 2024, at a price of 15,000 per year. At the time that the contract is modified, Mopps is charging other customers 13,500 for the cleaning and janitorial service. Required: Should Mopps and Conklin treat the modification as a separate contract? If so how should Mopps account for the contract modification on December 31, 2020? Support your opinion by discussing the application to this case of the factors that need to be considered for determining the accounting for contract modifications.Spath Company borrows 75,000 by issuing a 4-year, noninterest-bearing note to a customer on January 1, 2019. In addition, Spath agrees to sell inventory to the customer at reduced prices over a 5-year period. Spaths incremental borrowing rate is 12%. The customer agrees to purchase an equal amount of inventory each year over the 5-year period so that a straight-line method of revenue recognition is appropriate. Required: Prepare the journal entries on Spaths books for 2019 and 2020. (Round answers to 2 decimal places.)
- On January 1, 2019, Northfield Corporation becomes delinquent on a 100,000, 14% note to First National Bank, on which 16,651 of interest has accrued. On January 2, 2019, the bank agrees to restructure the note. It forgives the accrued interest, extends the repayment date to December 31, 2021, and reduces the interest rate to 10%. Required: Prepare a schedule for Northfield to compute the annual interest expense in regard to the preceding note for each year of the restructuring agreement.On October 10, 2020, Executor Co. entered into a contract with Belisle Inc. to transfer Executor's specialty products (sales value of $10,000, cost of $6,500) on December 15, 2020. Belisle agrees to make a payment of $5,000 upon delivery and signs a promissory note to pay the remaining balance on January 15, 2021. What entries does Executor make in 2020 on this contract? Ignore time value of money considerations.Cass 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. On what date does a contract exist between Cass and Dearborn? 2. What are Cass’s performance obligations in the contract? 3. What is the transaction price? 4. Does this transaction price need to be allocated? 5. Prepare Cass’s journal entries related to the contract with Dearborn.
- On October 10, 2020, Flounder Co. entered into a contract with Belisle Inc. to transfer Flounder’s specialty products (sales value of $9,200, cost of $6,500) on December 15, 2020. Belisle agrees to make a payment of $5,400 upon delivery and signs a promissory note to pay the remaining balance on January 15, 2021. What entries does Flounder make in 2020 on this contract?On January 1, 2018, an entity enters into a contract to transfer Products C and D to a customer in exchange for P1,000. The contract requires Product C to be delivered first and states that payment for the delivery of Product C is conditional on the delivery of Product D. The stand-alone selling prices of Product C and D are P480 and P720, respectively. Product C is delivered on January 3, 2018 while Product D is delivered on March 31, 2018. The customer pays on April 8, 2018. How much is the balance of contract liability on January 3, 2018?On December 31, 2023, Sablok Company sells production equipment to Tang Inc. for $50,000. Sablok includes a one-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on December 31, 2023. Sablok estimates the prices to be $48,800 for the equipment and $1,200 for the cost of warranty. Instructions Are the sale of the equipment and the warranty separate performance obligations within the contract? Explain. Prepare a single compound journal entry to record this transaction on December 31, 2024. Ignore any related cost of goods sold entry. Repeat the requirements for part (b), assuming that, in addition to the assurance warranty, Sablok sold an extended warranty (service-type warranty) for an additional two years (2024–2025) for $800. (Hint: Use unearned revenue).
- On May 1, 2025, Sandhill Company enters into a contract to transfer a product to Anthony Company on September 30, 2025. It is agreed that Anthony will pay the full price of $24,560 in advance on June 15, 2025. Anthony pays on June 15, 2025, and Sandhill delivers the product on September 30, 2025. Prepare the journal entries required for Sandhill in 2025. (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 all debit entries before credit entries. Record journal entries in the order presented in the problem.) Date 11 Account Titles and Explanation Debit CreditOn January 2, 2025, Sunland Company sells production equipment to Bramble Inc. for $54,000. Sunland includes a 2-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on January 2, 2025. During 2025, Sunland incurs costs related to warranties of $940. At December 31, 2025, Sunland estimates that $680 of warranty costs will be incurred in the second year of the warranty. (a) Prepare the journal entry to record this transaction on January 2, 2025, and on December 31, 2025 (assuming financial statements are prepared on December 31, 2025). (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 all debit entries before credit entries. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit CreditOn January 1, 2019, Fulton Inc. enters into a contract with Gibson to deliver goods. Gibson pays $100,000 at the time the contract is signed, at which time the goods are transferred and Fulton’s performance obligation is complete. In addition, Gibson agrees to pay Fulton $100,000 on December 31, 2019, and December 31, 2020. If Fulton entered into a financing arrangement with Gibson it would charge an interest rate of 9%. Please assist with the journal entries. Thank you! There are 8 journal entries in all.