Numbers 22-24 (Purchase Commitment) During 2022, Tartarus Company signed a noncancellable contract to purchase 5,000 sacks of rice at P1,800 per sack with delivery to be made in 2022. On December 31, 2022, the price of rice had fallen to P1,700 per sack. On April 15, 2023, Tartarus Company accepts delivery of rice when the price is P1,760 per sack. 22. In December 31, 2022 income statement, what amount of loss on purchase commitment should be recognized? a. 500,000 b. 200,000 c. 300,000 d. 0 23. What amount of recovery of loss on purchase commitment should Tartarus recognize on April 15, 2023? a. 500,000 b. 200,000 с. 300,000 d. 0 24. What amount of purchases should be recorded on April 15, 2023? a. 9,000,000 b. 8,500,000 c. 8,800,000 d. 8,200,000

Numbers 22-24 (Purchase Commitment) During 2022, Tartarus Company signed a noncancellable contract to purchase 5,000 sacks of rice at P1,800 per sack with delivery to be made in 2022. On December 31, 2022, the price of rice had fallen to P1,700 per sack. On April 15, 2023, Tartarus Company accepts delivery of rice when the price is P1,760 per sack. 22. In December 31, 2022 income statement, what amount of loss on purchase commitment should be recognized? a. 500,000 b. 200,000 c. 300,000 d. 0 23. What amount of recovery of loss on purchase commitment should Tartarus recognize on April 15, 2023? a. 500,000 b. 200,000 с. 300,000 d. 0 24. What amount of purchases should be recorded on April 15, 2023? a. 9,000,000 b. 8,500,000 c. 8,800,000 d. 8,200,000

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

Chapter7: Inventories: Cost Measurement And Flow Assumptions

Section: Chapter Questions

Problem 8E

See similar textbooks

Similar questions

Premium Obligation Yummy Cereal Company is offering one toy shovel set for 15 box tops of its cereal. Year-to-date sales have been off, and it is hoped that this offer will stimulate demand. Each shovel set costs the company 3. The following data are available for the last 3 months of 2019: It is estimated that only 70% of the box tops will be redeemed. The cereal sells for 2.80 per box. Required: 1. Prepare journal entries for each month to record sales, shovel set purchases, and redemptions. 2. Assuming Yummy prepares monthly financial statements, indicate how the inventory of premiums and the estimated liability would be disclosed on Yummys ending balance sheets for October, November, and December.
On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million. The promise to transfer the warehouse is determined to be a performance obligation. The contract states that if the warehouse is usable by November 30, 2019, Elkhart will receive a bonus of 600,000. For every week after November 30 that the warehouse is not usable, the bonus will decrease by 150,000. Elkhart provides the following completion schedule: Required: 1. Assume that Elkhart uses the expected value approach. What amount should Elkhart use for the transaction price? 2. Assume that Elkhart uses the most likely amount approach. What amount should Elkhart use for the transaction price? 3. Next Level What is the purpose of assessing whether a constraint on the variable consideration exists?
56 In August 2021, Commonlo Corp. commits to selling 100 of its merchandise to M&H Co. for P30,000 (P300 per product). The merchandise is to be delivered to M&H over the next 6 months. After 60 merchandises were delivered, the contract is modified and Commonlo promises to deliver 80 more products for an additional P21,600 (P270 per station). At year-end, Commonlo delivered an additional 90 products. All sales are cash on delivery. Assume that the additional term is a prospective modification to the original contract. How much revenue will be recognized on the contract for the year 2021?
62 In August 2021, Commonlo Corp. commits to selling 100 of its merchandise to M&H Co. for P30,000 (P300 per product). The merchandise is to be delivered to M&H over the next 6 months. After 60 merchandises were delivered, the contract is modified and Commonlo promises to deliver 80 more products for an additional P21,600 (P270 per station). At year-end, Commonlo delivered an additional 90 products. All sales are cash on delivery. How much revenue will be recognized on the contract for the year 2021?
46. During 2021, Tartarus Company signed a noncancellable contract to purchase 500 sacks of rice at P900 per sack with delivery to be made in 2022. On December 31, 2021, the price of rice had fallen to P850 per sack. On May 9, 2022, Tartarus Company accepts delivery of rice when the price is P880 per sack. In December 31, 2021 income statement, what amount of loss on purchase commitment should be recognized?
58. During 2021, Tartarus Company signed a noncancellable contract to purchase 500 sacks of rice at P900 per sack with delivery to be made in 2022. On December 31, 2021, the price of rice had fallen to P850 per sack. On May 9, 2022, Tartarus Company accepts delivery of rice when the price is P880 per sack. What amount of purchases should be recorded on May 9, 2022?
In August 2020, Atlantic Corp, commits to selling 100 of its merchandise to Boy Co. for P30,000 (P300 per product). The merchandise is to be delivered to Boy over the next 6 months. After 60 mierchandises were delivered, the contract is modified and Commonio promises to deliver 80 more products for an additional P21,600 (P270 per station). At year-end, Atlantic delivered an additional 90 products. All sales are cash on delivery Assume that the additional terms anpective modification to the original contract. How much revenue will be recognized on the contract for the year 2020?
During 2021, Tartarus Company signed a noncancellable contract to purchase 500 sacks of rice at P900 per sack with delivery to be made in 2022. On December 31, 2021, the price of rice had fallen to P850 per sack. On May 9, 2022, Tartarus Company accepts delivery of rice when the price is P880 per sack. What amount of recovery of loss on purchase commitment should Tartarus recognize on May 9, 2022
Choose the correct. St. Philip Company ordered parts costing €100,000 from a foreign supplier on January 15 when the spot rate was $0.20 per €. A one-month forward contract was signed on that date to purchase €100,000 at a forward rate of $0.23. The forward contract is properly designated as a fair value hedge of the €100,000 firm commitment. On February 15, when the company receives the parts, the spot rate is $0.22. At what amount should St. Philip Company carry the parts inventory on its books?a. $20,000b. $21,000c. $22,000d. $23,000
Omicron plc prepares financial statements to 31 December each year. On 1 January 2021, Omicron plc entered into a contract with a customer to sell Product X for £10 per unit. If the customer purchases more than 10,000 units of Product X in a calendar year, the contract specifies that the price per unit is retrospectively reduced to £9 per unit. For the quarter ended 31 March 2021, Omicron plc sells 1,500 units of Product X to the customer and based on this volume of purchases, Omicron plc consider that it is highly probable that the customer’s purchases will not exceed the 10,000-unit threshold required for the volume discount in the calendar year. In May 2021, Omicron plc’s customer acquires another company and, in the quarter, ended 30 June 2021, Omicron plc sells an additional 7,000 units of Product X to the customer. In the light of the new fact, Omicron plc estimates that the customer’s purchases will exceed the 10,000- unit threshold for the calendar year. Required Explain the…
Problem 8 On November 23, 2019, Guava Company entered intoa non-cancellable commitment to purchase 120,000 barrels of aviation fuel for P35 per barrel on March 14, 2020. By December 31, 2019 the purchase price had fallen to P25 per barrel. However, by March 14, 2020, when the entity took delivery of the 120,000 barrels the price had risen to P40 per barrel. How much is the recovery of loss on purchase commitment on March 14, 2020?
On October 6, 2021, the Elgin Corporation signed a purchase commitment to purchase inventory for $60,000 on or before March 31, 2022. The company’s fiscal year-end is December 31. The contract was exercised on March 21, 2022, and the inventory was purchased for cash at the contract price. On the purchase date of March 21, the market price of the inventory was $54,000. The market price of the inventory on December 31, 2021, was $56,000. The company uses a perpetual inventory system.Required:1. Prepare the necessary adjusting journal entry (if any is required) on December 31, 2021.2. Prepare the journal entry to record the purchase on March 21, 2022.