On June 1, 2016, TCO enters into a forward agreement with XYZ to buy 100,000 gallons of fuel oil at $2.40 on December 31, 2016. At the time of inception of the forward, the price of fuel oil is $2.45. On December 31, 2016, the price of fuel oil is $2.48. The contract allows for net settlement. Required What is the net settlement on the forward contract?
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- Zoro Company enters into a contract to sell Product A and Product B on July 1, 2020 for an upfront cash payment of P250,000. Product A will be delivered at the end of the year, and Product B will be delivered the following year. Zoro Company sells Product A for P80,000 and Product B for P240,000. 1. How many performance obligations are there in the contract? 2.what is the transaction price? 3.how much is revenue to be recognized in 2020? 4. how much is revenue to be recognized in 2021?Answer the following questions.(a) On May 1, 2017, Goldberg Company sold some machineryto Newlin Company on an installment contractbasis. The contract required five equal annualpayments, with the first payment due on May 1,2017. What present value concept is appropriate forthis situation?(b) On June 1, 2017, Seymour Inc. purchased a new machinethat it does not have to pay for until June 1, 2019.The total payment on June 1, 2019, will include bothprincipal and interest. Assuming interest at a 12% rate,the cost of the machine would be the total paymentmultiplied by what time value of money concept?(c) Costner Inc. wishes to know how much money itwill have available in 5 years if five equal amounts of$35,000 are invested, with the first amount investedimmediately. What interest table is appropriate forthis situation?(d) Megan Hoffman invests in a “jumbo” $200,000,3-year certificate of deposit at First Wisconsin Bank.What table would be used to determine the amountaccumulated at the end of…On 1/1/x4, TrueJet Airlines and Supplier Co. signed a purchase agreement whereby TrueJet agreed to purchase 20,000 gallons of jet fuel from Supplier Co. for $4.90 per gallon on 12/31/x6. The contract stipulates that, at settlement on 12/31/x6, TrueJet can choose to accept settlement in cash of the difference between the then-current market price and the contract price for the jet fuel, or TrueJet can accept physical delivery of the jet fuel. At the time the contract was signed, jet fuel was selling for $4.10 per gallon. On 12/31/x4, jet fuel was selling for $5.05 per gallon. As of 12/31/x5, jet fuel was selling for $4.85 per gallon. Required: What entries should TrueJet record as of: 1 - contract inception? 2- then at 12/31/x4? 3 - then at 12/31x5?
- 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.Cass Company enters into a contract with Dearborn Inc. to sell it $50,000 of goods with delivery on May 10, 2017. Cass manufactured the goods at a cost of $33,000. The contract is signed on April 15, 2017, at which time Dearborn pays Cass $25,000. Cass delivers the goods on May 10, 2017, and Cass 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 1 July 2022, Entity A entered into Contract X with a customer, Entity B, to sell Product A for $450 per unit. If Entity B purchases more than 800 units of Product A in a 12-month period, Contract X specifies that the price will be reduced to $390 per unit. Entity B agreed to settle all outstanding amounts of Contract X in July 2023 after both Entities agreed on the total units of sales on 30 June 2023. For the quarter that ended 30 September 2022, Entity A sold 216 units of Product A to Entity B. At that date, Entity A concluded that Entity B's purchases would not exceed the 800 units threshold required for the volume discount. In October 2022, Entity B acquired another production unit which increased the demand for Product A from Entity A. On 30 November 2022, Entity B ordered an additional 581 units of Product A from Entity A. In light of this, Entity A concluded that the customer's purchases are now highly likely to exceed the 800 units threshold in the 12 months to 30 June 2023.…
- ABC Company Ltd purchased 5000 cocoa futures contract at a price of $150per contract. As part of the contract, ABC was required to deposit $10 percontract initially in their account with the maintenance margin set at $5 percontract. If the price per contract falls to $142 overnight, what action will theexchange require ABC to undertake?Answer the following questions. a. On May 1, 2020, Goldberg Company sold some machinery to Newlin Company on an installment contract basis. The contract required five equal annual payments, with the first payment due on May 1, 2020. What present value concept is appropriate for this situation? b. On June 1, 2020, Seymour Inc. purchased a new machine that it does not have to pay for until June 1, 2022. The total payment on June 1, 2022, will include both principal and interest. Assuming interest at a 12% rate, the cost of the machine would be the total payment multiplied by what time value of money concept? c. Costner Inc. wishes to know how much money it will have available in 5 years if five equal amounts of $35,000 are invested, with the first amount invested immediately. What interest table is appropriate for this situation? d. Megan Hoffman invests in a “jumbo” $200,000, 3-year certificate of deposit at First Wisconsin Bank. What table would be used to determine the…E18-9 (Allocate Transaction Price) Sanchez Co. enters into a contract to sell Product A and Product B on January 2, 2015, for an upfront cash payment of R$150,000. Product A will be delivered in 2 years (January 2, 2017) and Product B will be delivered in 5 years (January 2, 2020). Sanchez Co. allocates the R$150,000 to Products A and B on a relative standalone selling price basis as follows. Product A Product B Standalone Selling Prices R$ 40,000 120,000 R$160,000 Percent Allocated 25% 75% Allocated Amounts R$ 37,500 112,500 R$150,000 Sanchez Co. uses an interest rate of 6%, which is its incremental borrowing rate. Instructions (a) Prepare the journal entries necessary on January 2, 2015, and December 31, 2015. (b) Prepare the journal entries necessary on December 31, 2016. (c) Prepare the journal entries necessary on January 2, 2017.
- On October 1, 2021, A Corp. purchased goods from US based corporation worth 60,500 US dollars. Payment is due in 120 days on January 30, 2022. In view of the transaction, Active Corp. entered into a forward contract to buy 60,500 US dollars from PNB in 120 days. The relevant rates are as follows: 10/01/21 12/31/21 01/30/22 Spot rate P 53 P 55 P 53.50 Forward rate 54 56.50 55How much is the net forex loss on settlement date?On January 1, GEN enters into a contract with LORD for the sale of a high-end security scanner for P630,000. The contract includes a put option the obliges GEN to repurchase the scanner machine from LORD for P567,000 on or before December 31. The market value is expected to be P495,000 on December 31. LORD pays GEN P630,000 on January 1. The transaction should be accounted for as a:A. Sale C. No sale/leaseB. Lease D. Cannot be determined PLEASE SHOW HOW THE ANSWER WAS FORMULATED WITH COMPLETE SOLUTION IN GOOD ACCOUNTING FORM.Sandiago Co leased the equipment to Dedi Inc, on April 1, 2016. The lease, properly accounted for as a sale by Sandiago, has a period of 8 years ending March 31, 2024. The first of 8 equal annual payments is Rp 17,500,000 per year (excluding implementation costs) was carried out on April 1, 2016. The cost of equipment for Sandiago was Rp. 94,000,000. The equipment has an estimated useful life of 8 years with no salvage value, Sandiago uses straight-line depreciation and depreciates a full year in the year of purchase. The cash selling price of this equipment is IDR 102,690,000. Required: (1) Prepare the journal entries needed to record the lease on Sandiago's books (2) How much interest income will Sandiago recognize in 20167
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