During the current fiscal year, Sandhill Corp. signed a long-term non-cancellable purchase commitment with its primary supplier.Sandhill agreed to purchase $1.92 million of raw materials during the next fiscal year under this contract. At the end of the currentfiscal year, the raw material to be purchased under this contract had a market value of $1.56 million. What is the journal entry at theend of the current fiscal year?Debit Loss on Purchase Commitments for $360000 and credit Estimated Liability on Purchase Commitment for $360000No journal entry is requiredO Debit Loss on Purchase Commitments for $1560000 and credit Estimated Liability on Purchase Commitments for$1560000○ Debit Estimated Liability on Purchase Commitments for $360000 and credit Loss on Purchase Commitments for $360000

The correct journal entry at the end of the current fiscal year would be : Debit Estimated Liability…

Answered: During the current fiscal year,…

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 19RE

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During 2019, the Mitt Co. signed a non-cancellable contract to purchase 2,000 units of a raw material at P 32 per pound. On December 31, 2019, the market price of the raw material is P 26 per unit, and the selling price of the finished product is expected to decline accordingly.The financial statement prepared for 2019 should report a. A loss of P 12,000 in the statement of comprehensive income. b. An appropriation of retained earnings for P 12,000. c. Nothing regarding this matter. d. A note describing the expected loss on the purchase commitment.
Newmarket's revenue as shown in its draft statement of profit or loss for the year ended 31 December 20X9 is $27 million. This includes $8 million for a consignment of goods sold on 31 December 20X9 on which Newmarket will incur ongoing service and support costs for two years after the sale. The supply of the goods and the provision of service and support are separate performance obligations under the terms of IFRS 15 Revenue from contracts with customers. The cost of providing service and support is estimated at $800,000 per annum. Newmarket applies a 30% mark-up to all service costs. At what amount should revenue be shown in the statement of profit or loss of Newmarket for the year ended 31 December 20X9? (Ignore the time value of money.)
Subject: acounting
In 2021, a merchandise was sold on instalment basis by ONB for P80, 000 at a gross profit of 25% on cost. During this year, a total of P42, 500, including interest of P12, 500 was collected on this contract. In 2021, no collection was made on this sale, and the merchandise was repossessed. The fair value of the merchandise is P34, 000. Reconditioning cost amounts to P4, 000. What is the gain (loss) on reposition? a. 10, 000 b. (6, 000) c. (14, 000) d. (10, 000)
Eye Deal Optometry leased vision-testing equipment from Insight Machines on January 1, 2021. Insight Machines manufactured the equipment at a cost of $290,000 and lists a cash selling price of $333,293. Appropriate adjusting entries are made quarterly. (FV of $1, PV of $1, FVA of $1, PVA of $1. FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Related Information: Lease term Quarterly lease payments Economic life of asset Interest rate charged by the lessor Required: 1. Prepare appropriate entries for Eye Deal to record the arrangement at its beginning, January 1, 2021, and on March 31, 2021. 2. Prepare appropriate entries for Insight Machines to record the arrangement at its beginning, January 1, 2021, and on March 31, 2021. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare appropriate entries for Eye Deal to record the arrangement at its beginning, January 1, 2021, and on March 31, 2021. (If no entry is…
Kk.303.
Blossom Enterprises Ltd. has entered into a contract beginning in February 2020 to build two warehouses for Atlantis Structures Ltd. The contract is a non-cancellable fixed price contract for $10.0 million. The following data pertain to the construction period (all figures in thousands). Costs for the year Estimated costs to complete Progress billings for the year (non-refundable) Cash collected for the year Gross profit/(loss) $ eTextbook and Media List of Accounts Account Titles and Explanation (To record cost of construction) The construction industry has experienced significant expansion, making construction materials and labour more costly than originally estimated. Blossom finds it extremely difficult to estimate the costs to complete construction and therefore difficult to estimate the percent complete. It must account for the construction project using the zero-profit method. (To record progress billings) Calculate the amount of the gross profit to be recognized each year of…
1. What amount of profit on the sale should be recorded for the year ended December 31, 2021? 2. What amount of interest revenue should be recorded for the year ended December 31, 2021?
Koolman Construction Company began work on a contract in 2019. The contract price is 3,000,000, and the company determined that its performance obligation was satisfied over time. Other information relating to the contract is as follows: Required: 1. Compute the gross profit or loss recognized in 2019 and 2020. 2. Prepare the appropriate sections of the income statement and ending balance sheet for each year.
Kim Corp. leased vision-testing equipment from General Third Company on January 1, 2021. General Third Company manufactured the equipment at a cost of $280,000 and lists a cash selling price of $350,248. Appropriate adjusting entries are made quarterly. Lease term 5 years (20 quarterly periods) Quarterly lease payments $21,000 at Jan. 1, 2021, and at Mar. 31, June 30, Sept. 30, and Dec. 31 thereafter Economic life of asset 5 years Interest rate charged by the lessor 8% Required: 1. Prepare appropriate entries for Kim Corp. to record the arrangement at its beginning, January 1, 2021, and on March 31, 2021. 2. Prepare appropriate entries for General Third Company to record the arrangement at its beginning, January 1, 2021, and on March 31, 2021
A. On January 1, 2020, Machinery Corp. enters into a contract with a customer for the sale of a machine and relatedone-yearmaintenance services for a total contract price of P2,000.000. Machinery Corp. regulariy sells these items separately. If they were to be purchased separately, their stand-alone selling prices are as follows: • P1,800,000 for the machine; and P600,000 for the one-year maintenance services Machinery Corp transfesthe machine, andcolects the total contract price, on February 1, 2020. The maintenance services start on that date. Required: Analyze the five steps of model of revenue recognition.

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