On January 1, a company holds an inventory of a commodity carried at a cost of $100,000. The commodity's current market value is $110,000. To guard against a potential decline in the value of that inventory, the company purchases put options with a total strike price of $110,000 exercisable in 3 months, paying a total of $500 for the options. The puts qualify as a fair value hedge of the inventory. All income effects of the inventory and the hedge are reported in cost of goods sold. On March 25, the commodity's market price is $108,000 and the company closes the hedge by selling the put options for $2,200. The company sells its inventory later in the year. The company has a December 31 year-end. What is the carrying value of inventory as of March 25? O&$ 108,000 Ob.$ 100,000 Oc$ 98,000 Od-s110,000
Q: Pina Company offers a set of building blocks to customers who send in 3 UPC codes from Pina cereal,…
A: Journal entries are the foremost reporting in the accounting system. These are prepared in…
Q: Cash Flows from Operating Activities Net Income Adjustments to reconcile net income to Net Cash…
A: Cash flow statement is a statement which states the cash situation of the company. This statement…
Q: Presented below is a list of possible transactions. Analyze the effect of the 18 transactions on the…
A: The financial statements are the essential books of records prepared by the company. It includes an…
Q: On January 1, 2015, Lord Company purchased land with valuable natural ore deposits for P5,000,000.…
A: The depletion expense is charged on natural resources. The mining, timber, and oil and gas…
Q: equirement 1. If SnowDreams cannot reduce its costs, what profit will it earn? State your answer…
A: Income statement has been prepared in the current case, where concept of variable costing has been…
Q: On July 1, 20x3, Wenna Inc. purchased as a short-term investment a P 1,000,000 face value Keizen Co.…
A: WORKINGS- Date of Purchase - July 1 ,20x3 Calculation of Accrued Interest P1,000,000 X 10% X 1/2…
Q: mat weights should it use for its WACC calculation? Assets $1,030 Debt Equity Liabilities & Equity $…
A: Answer :Market value of debt = 500 Market value of equity = 530*1.4= 742 Weight of debt = 500 / (500…
Q: Compute the net present value (NPV) of this investment.
A: Meaning of Net present value It is the difference between present value of cash inflows and present…
Q: in 2024, the marion company purchased land containing a mineral mine for $1,500,000. Additional…
A: Book Value of any asset means the value obtained after subtracting the depreciation amount from the…
Q: depreciation exceeded book depreciation by $80,000. in 2021, Prance reports $600,000 of pretax book…
A: In the concept of taxes on Income, there are some items which are regarded as temporary differences…
Q: Ariana and John who file a joint return have to dependent children, Kai and Angel. Kai is a freshman…
A: The Lifetime Learning Credit (LLC) is a tax credit score used to offset the price of lessons and…
Q: The equity sections for Atticus Group at the beginning of the year (January Stockholders' Equity…
A: Stockholders equity represent ownership in a firm. Included in the stockholders equity section is…
Q: Sitka Industries uses a cost system that carries direct materials inventory at a standard cost. The…
A: The variance is the difference between the actual data and standard output of the production. The…
Q: accurate. The seller and the Conders paid their share of the tax. The full property tax bill is paid…
A:
Q: Alexander Inc. makes basketballs. The results for the year were as follows: Basketballs…
A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for…
Q: would be 80% of direct labor cost. (a) Prepare a make or buy analysis of costs for this part. (Enter…
A: Requirement:- 1)Preparation of a make or buy analysis of costs for this unit as follows under:-
Q: During the year ended 31 December 20X1, Bougs Co built an extension to its head office. Associated…
A: When a fixed asset is constructed by a company, the following are the costs to capitalize: 1.…
Q: N6 A new machine tool is being purchased for $260,000 and is expected to have a $36,000 salvage…
A: Depreciation is the amount calculated on the carrying amount of the fixed asset over the life of the…
Q: Currently, you sell 1,000 units of product A per month at a price of $40 per unit. The variable…
A: Solution... Unit variable cost = Direct material + Direct labor + Variable overhead = $10 + $4…
Q: 1. Record each transaction in the journal using the following chart of accounts. Explanations are…
A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: Mr. Chow, Ms. King, Mr. Jolly and Ms. Bee formed a partnership on Jan. 01, 2017 with original…
A: Partnership means where two or more person comes together to run the business and share profit or…
Q: [The following information applies to the questions displayed below.] Simon Company's year-end…
A: Ratio Analysis -The ratio is the technique used by the prospective investor or an individual or…
Q: When does the automatic 60-day extension period for qualified taxpayers impacted by federally…
A: Introduction A significant disaster declared in accordance with Section 401 of the Stafford Act and…
Q: V2. On November 29th, Year 1, Jeffrey White purchased a piece of equipment (7-year property) used to…
A: Depreciation is the reduction in the value of asset due to normal wear and tear Effluxion of time.…
Q: Grouper Corporation is authorized to issue 22,000 shares of $50 par value, 10% preferred stock and…
A: The journal entries are prepared to keep the record of day to day transactions of the business on…
Q: Varto Company has 7,400 units of its product in inventory that it produced last year at a cost of…
A: Incremental evaluation is a selection-making method utilized in enterprise to decide the proper…
Q: The following information is available for a company's maintenance cost over the last seven months.…
A: A variable cost is one that changes depending on the amount produced or sold by the company.…
Q: Accompanying the bank statement has a memo for bank service charges. On the bank reconciliation, the…
A: Bank reconciliation: It is a statement drawn up by the business to verify the cash book balance with…
Q: Lanfield, Inc. Comparative Income Statement Years Ended December 31, 2024 and 2023 2024 2023 Net…
A: Financial ratios are one of the most effective techniques for analyzing a company's financial…
Q: Determine the proper order of the steps in which a new company's master budget should be prepared. +…
A: Let us know about master budget Businesses may find master budgets to be a useful tool. A master…
Q: How does the master budget for a merchandising organization differ from the master budget for a…
A: The master budget is one of the most important records produced by a company throughout the planning…
Q: You work for a company that has two manufacturing locations. Your company repairs large ships for…
A: No, It is not ethical to assign government job to location 2 where overhead cost is too high.
Q: You make widgets, which is a subassembly for you main product of whatsup. An outside vendor has…
A: The company may decide to purchase the component from an outside supplier or it may decide to…
Q: ABC business reported the following events during the month of December 2022. Dec 1 Sold merchandise…
A: Special journals are specialized and classified transaction based journal which are in contrast with…
Q: Listed below are the following August 31, 2021 accounts and information for the Moses Bosco Company.…
A: Out of the profit earned by the business entities some of the profit is distributed to the…
Q: In 2010 Casey made a taxable gift of $5.6 million to both Stephanie and Linda (a total of $11.2…
A: It is the amount of tax payable by an individual who transfers something to any other individual…
Q: Part U16 is used by Mcvean Corporation to make one of its products. A total of 17,000 units of this…
A: Introduction: In a make or buy decisions management chose either to make the product in house or buy…
Q: Provide the missing information (A-H) in the table. Use the formulas learned in Chapter 10. (Round…
A: The margin ratio - is one of the ratios that measure profitability of the entity. It compares the…
Q: Han Products manufactures 37,000 units of part S-6 each year for use on its production line. At this…
A: MAKE OR BUY DECISION Sometimes a manufacturer has to decide as to whether a certain component or…
Q: Sitka Industries uses a cost system that carries direct materials inventory at a standard cost. The…
A: Solution:- Calculation of Direct material quantity variance as follows under:- Direct material…
Q: The comparative balance sheets for Waterway Company as of December 31 are as follow Assets Cash…
A: In this question, we need to prepare Statement of cash flows for the year ended December 31, 2022…
Q: Based on your understanding of a system theory, accounting theory, and International Financial…
A: Before knowing the reason and the development of IFRS we must have an overview of these terms/…
Q: A company recorded the $27,000 adjusting entry for the earning of rent received in advance by…
A: The adjustment entries are prepared to adjust the revenue and expenses of the current period. The…
Q: Listed below are the following August 31, 2021 accounts and information for the Moses Bosco Company.…
A: Lets understand the basics. Net income is a all revenue earned less all expenses incurred. It is…
Q: Cooperton Mining just announced it will cut its dividend from $4.21 to $2.42 per share and use the…
A: (a) Formula for required return (Ke): Ke = [D1 / P0 ] + g where:- Ke =Required return D1 =…
Q: The following selected information is taken from the general ledger of Wildhorse Limited: Sales…
A: Cash flows from operating activities: It is a section of the Statement of cash flow that explains…
Q: KYLER Company provided the following data for the purpose of reconciling the cash balance per book
A: Balance per book. 220000 December NSF checks (of which P10,000 had been…
Q: Applying Excel-Data Visualization: Exercise (Part 2 of 2) On the Data Visualization - Student tab in…
A: 1. We first enter the data in a Microsoft Excel spreadsheet. We then format the Per per unit column…
Q: Cash Accounts receivable Computer supplies Prepaid insurance Prepaid rent Office equipment Account…
A: Balance Sheet :— It is one of the financial statement that shows list of final balances of assets,…
Q: Are these written in your own words?
A: Yes these are writtern in own words. Below is a alternative answer for your reference
DO NOT GIVE SOLUTION IN IMAGE FORMAT
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- On October 15, 2020, Oil Products Co. purchased 4,000 barrels of fuel oil with a cost of $240,000 ($60 per barrel). Oil Products is holding this inventory in anticipation of the winter 2021 heating season. Oil Products accounts for its inventory at the lower-of-FIFO-cost-or-net realizable value. To hedge against potential declines in the value of the inventory, Oil Products also purchased a put option on the fuel oil. Oil Products paid an option premium of $300 for the put option, which gives Oil Products the option to sell 4,000 barrels of fuel oil at a strike price of $60 per gallon. The option expires on March 1, 2021. The following data are available with respect to the values of the fuel of inventory and the put option. Date Market Price of Fuel Oil Time Value of Put Option October 31, 2020 $58 per gallon $175 November 30, 2020 57 per gallon 105 December 31, 2020 54 per gallon 40 Instructions a. Prepare the journal entries of Oil Products for the…During the third quarter of the current year, Beamer Manufacturing Company invested in derivative instruments for a variety of reasons. The various investments and hedging relationships are as follows:a. Call Option A—This option was purchased on July 10 and provided for the purchase of 10,000 units of commodity A in October at a strike price of $45 per unit. The company designated the option as a hedge of a commitment to sell 10,000 units of commodity A in October at a fixed price of $45 per unit. Information regarding the option and commodity A is as follows: July 10 July 31 August 31 September 30 Spot price Value of option $ 45 2000 $46 12400 $44 1000 $46.50 16000 b. Call Option B—This option provided for the purchase of 10,000 units of commodity B in October at a strike price of $30 per unit. The company designated the option as a hedge of a forecasted purchase of commodity B in October. Information regarding the option and commodity B is as follows: July 1…During its first year of operations, Giovani Foods purchased available-for-sale securities for $37,500. Giovani Foods expects it will sell the securities within the next year. At the end of the year, these securities had a market value of $33,900. Explain how the decrease in fair value of the securities would be reported on Giovani Foods’ financial statements for the year?
- Moonview Company uses approximately 200,000 units of raw material in its manufacturing operations. On December 1, 2021, the entity purchased a call option to buy 200,000 units of the raw material on July 1, 2022 at a strike price of ₱25 per unit. The entity paid ₱20,000 for the call option. The entity designated the call option as a cash flow hedge against price fluctuation for its July purchase. The market price of the raw materials is ₱28 on December 31, 2021 and ₱21 on July 1, 2022. 1. What is the derivative asset on December 31, 2021?a. 600,000b. 580,000c. 20,000d. 0 2. What is the derivative liability on July 1, 2022?a. 800,000b. 400,000c. 780,000d. 0 3. What is the cost of purchases on July 1, 2022?a. 5,000,000b. 4,980,000c. 4,200,000d. 4,220,000Sycamore, Inc. purchased €100,000 of 8 percent bonds of Alvarado Industries on January 1, 2022, at a discount, paying €92,278. The bonds mature January 1, 2027, and yield 10 percent; interest is payable each July 1 and January 1. Sycamore manages and evaluates investment performance on a documented risk-management or investment strategy based on fair value information. On December 31, 2022, when the market rate of interest is 12%, and the fair value of the bonds is €89,934, Sycamore will record an unrealized gain/loss ofGerda Motors purchased custom-made machinery on January 1, 2018, in exchange for a three-year $300,000 note with a stated annual interest rate of 3%, which is paid at the end of each year starting on December 31, 2018 through December 31, 2020. Because it was so custom, Gerda did not know the fair value of the machinery. The market rate for a note of similar risk is 7%. A. What is the value of the machinery capitalized on the balance sheet on January 1, 2018? [ Select ] ["300,000", "273,000", "278,304", "268,508"] B. How much interest expense is recognized on December 31, 2018? [ Select ] ["19,481", "21,000", "9,000", "18,796"] C. What is the carrying value of the note on December 31, 2018? [ Select ] ["278,304", "268,508", "300,000", "288,785"] Please avoid image based solution thnx
- Bicol Company uses approximately 200,000 units of raw material in its manufacturing operations. On December 1, 2021, the entity purchased a call option to buy 200,000 units of the raw material on July 1, 2022 at a strike price of P25 per unit. The entity paid P20,000 for the call option. The entity designated the call option as a cash flow hedge against price fluctuation for its July purchase. The market price of the raw material is P28 on December 31, 2021 and P21 on July 1, 2022. 1. What amount should be reported as derivative asset on December 31, 2021? a. 600,000 b. 580,000 C. 20,000 d. 0 2. What amount should be recognized as loss on call option in 2022? a. 300,000 b. 500,000 c. 200,000 d. 20,000Bicol Company uses approximately 200,000 units of raw material in its manufacturing operations. On December 1, 2021, the entity purchased a call option to buy 200,000 units of the raw material on July 1, 2022 at a strike price of P25 per unit. The entity paid P20,000 for the call option. The entity designated the call option as a cash flow hedge against price fluctuation for its July purchase. The market price of the raw material is P28 on December 31, 2021 and P21 on July 1, 2022. 3. What amount should be reported as derivative liability on July 1, 2022? a. 800,000 b. 400,000 c. 780,000 d. 0 4. What amount should be reported as cost of purchases on July 1, 2022? a. 5,000,000 b. 4,980,000 c. 4,200,000 d. 4,220,000On September 5, 2024, Howard Corporation signed a purchase commitment to purchase inventory for $137, 000 on or before March 31, 2025. The company's fiscal year-end is December 31. The contract was exercised on March 4, 2025, and the inventory was purchased for cash at the contract price. On the purchase date of March 4, 2025, the market price of the inventory was $121, 600. The market price of the inventory on December 31, 2024, was 5126,300. The company uses a perpetual inventory system. Required: Prepare the necessary adjusting journal entry (if any is required) on December 31, 2024. Prepare the journal to record the purchase on March 4, 2025.
- During the past several years the annual net income of Avery Company has averaged $540,000.At the present time the company is being offered for sale. Its accounting records show the bookvalue of net assets (total assets minus all liabilities) to be $2,800,000. The fair value of Avery’s netidentifiable assets, however, is $3,000,000.An investor negotiating to buy the company offers to pay an amount equal to the fair value forthe net identifiable assets and to assume all liabilities. In addition, the investor is willing to pay forgoodwill an amount equal to the above-average earnings for five years.On the basis of this agreement, what price should the investor offer? A normal return on the fairvalue of net assets in this industry is 15 percent.(Fair Value Hedge) On October 15, 2017, Oil Products Co. purchased 4,000 barrels of fuel oil with a cost of $240,000 ($60 per barrel). Oil Products is holding this inventory in anticipation of the winter 2018 heating season. Oil Products accounts for its inventory at the lower-of-FIFO-cost-or-net realizable value. To hedge against potential declines in the value ofthe inventory, Oil Products also purchased a put option on the fuel oil. Oil Products paid an option premium of $300 for the put option, which gives Oil Products the option to sell 4,000 barrels of fuel oil at a strike price of $60 per gallon. The option expires on March 1, 2018. The following data are available with respect to the values of the fuel of inventory and the put option. Date Market Price of Fuel Oil Time Value of Put Option October 31, 2017 $58 per gallon $175 November 30, 2017 57 per gallon 105 December 31, 2017 54 per gallon 40 Instructions(a) Prepare the journal entries of Oil Products for the…Orange Company purchased as a long-term investment $100 million of 10% bonds, dated July 1, on July 1, 2021. Management wants to trade the investment actively in the market. For bonds of similar risk and maturity the market yield was 12%. The price paid for the bonds was $90 million. Interest is received semiannually on June 30 and December 31. Due to changing market conditions, the fair value of the bonds at December 31, 2021, was $91 million. Requirements: Prepare the journal entry at the initial purchase date on July 1, 2021 Please prepare journal entry on Dec 31, 2021 when Orange Company received the interest payment 3. At what amount will Orange Company report its investment in the December 31, 2021 balance sheet? Prepare any adjusting entry, if necessary. 4. Company decides to sell the investment on January 7, 2022 when the market price increased to $92. Please prepare the TWO journal entries of sales transaction on January 7, 2022. 5. Suppose Orange Company…