At December 31, 2020, Shamrock, Inc., a manufacturer, has outstanding noncancelable purchase commitments for 63,000 pounds of raw material to be used in its manufacturing process. The purchase commitments require Shamrock, Inc. to pay $14 per pound for the raw material. The company prices its raw material inventory at cost or market, whichever is lower. (a2) Assuming that the market price as of December 31, 2020, is $10.00, record the journal entry. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31

At December 31, 2020, Shamrock, Inc., a manufacturer, has outstanding noncancelable purchase commitments for 63,000 pounds of raw material to be used in its manufacturing process. The purchase commitments require Shamrock, Inc. to pay $14 per pound for the raw material. The company prices its raw material inventory at cost or market, whichever is lower. (a2) Assuming that the market price as of December 31, 2020, is $10.00, record the journal entry. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 15E: On January 1, 2019, Piper Company entered into an agreement with Save-Mart to sell its most popular...

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On January 1, 2019, Piper Company entered into an agreement with Save-Mart to sell its most popular product, the gadget. The contract stipulates that the price per unit will decrease as Save-Mart purchases higher volumes of the gadget, as follows: The contract states that Save-Mart pays Piper the unit price based on the current sales volume. Once a volume threshold is reached, the price is retroactively reduced to the applicable price per unit. Based on its past experience with similar contracts, Piper believes that the total sales volume for the year will be 1,800 units and uses the most likely amount approach to estimate variable consideration. In addition, Piper concludes it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur once the uncertainty surrounding the variable consideration is resolved. Required: 1. Determine the transaction price per unit that Piper should use to record revenue. 2. Assume that Save-Mart purchases 800 units in the first quarter of 2019 and 900 units in the second quarter of 2019. Prepare Pipers journal entries to record the sales in the first and second quarters. 3. Given the higher than expected sales volume in the first half of the year, Piper increases its estimate of the sales volume to 2,800 units. Prepare the journal entry to record this change in estimate.
Sheridan Company sells goods that cost $320,000 to Ricard Company for $403,500 on January 2, 2020. The sales price includes an installation fee, which has a standalone selling price of $38,500. The standalone selling price of the goods is $365,000. 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, 2020. (b) Sheridan prepares an income statement for the first quarter of 2020, ending on March 31, 2020 (installation was completed on June 18, 2020). How much revenue should Sheridan recognize related to its sale to Ricard?
On December 31, 2019, Naysayer Company has outstanding purchase commitments for 10,000 gallons at P200 per gallon of raw materials to be used in the manufacturing process. Required : Prepare journal entry under each of the following assumptions : a. The market price on December 31, 2019 is P210. b. It is expected that the market price will decline to P170 in early January 2020. c. The market price on December 31 2019 is P170. d. The market price on December 31, 2019 is P170. On January 31, 2020 when the 10,000 gallon shipment is received, the market price is P150. e. The market price on December 31, 2019 is P170. On January 31, 2020 when the 10,000 gallon shipment is received, the market price is P210.
At December 31, 2020, Shamrock, Inc., a manufacturer, has outstanding noncancelable purchase commitments for 63,000 pounds of raw material to be used in its manufacturing process. The purchase commitments require Shamrock, Inc. to pay $14 per pound for the raw material. The company prices its raw material inventory at cost or market, whichever is lower.
Wildhorse Company sells on credits goods that cost $309,500 to Ricard Company for $415,500 on January 2, 2020. The sales price includes an installation fee, which has a standalone selling price of $45,500. The standalone selling price of the goods is $370,000. 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, 2020. (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 0 for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 2, 2020 enter an account title to record the transaction on January 2, 2017 enter a debit amount enter a credit amount enter an account title to record the transaction on January 2, 2017 enter a debit amount enter a credit amount enter an account title to record…
Shaw Company sells goods that cost $300,000 to Ricard Company for $410,000 on January 2, 2020. The sales price includes an installation fee, which has a standalone selling price of $40,000. The standalone selling price of the goods is $370,000. The installation is considered a separate performance obligation and is expected to take 6 months to complete. Instructions a. Prepare the journal entries (if any) to record the sale on January 2, 2020. b. Shaw prepares an income statement for the first quarter of 2020, ending on March 31, 2020 (installation was completed on June 18, 2020). How much revenue should Shaw recognize related to its sale to Ricard?
Ivanhoe Company sells on credits goods that cost $304,500 to Ricard Company for $418,500 on January 2, 2020. The sales price includes an installation fee, which has a standalone selling price of $36,000. The standalone selling price of the goods is $382,500. 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, 2020. (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 0 for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 2, 2020 enter an account title to record the transaction on January 2, 2017 enter a debit amount enter a credit amount enter an account title to record the transaction on January 2, 2017 enter a debit amount enter a credit amount enter an account title to record the…
Sarasota Company sells goods that cost $324,000 to Ricard Company for $442,800 on January 2, 2025. The sales price includes an installation fee, which has a stand-alone selling price of $43,200. The standalone selling price of the goods is $399,600. The installation is considered a separate performance obligation and is expected to take 6 months to complete (installation was completed on June 18, 2025). (a) How much revenue does Sarasota record on January 2, 2025? Revenue $
Wildhorse Company sells on credits goods that cost $302,500 to Ricard Company for $415,500 on January 2, 2020. The sales price includes an installation fee, which has a standalone selling price of $43,000. The standalone selling price of the goods is $372,500. The installation is considered a separate performance obligation and is expected to take 6 months to complete.
Kemper Company signed a long-term noncancelable purchase commitment with a major supplier to purchase raw materials in 2021 at a cost of $1,000,000. At December 31, 2020, the raw materials to be purchased have a market value of $950,000. Prepare any necessary December 31, 2020, entry.
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. 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