On July 15, 2017 Matrix Corp sells 20,000 snoe shovels to a distributor for $15 per shovel. The distributor pays the amount on July 15, 2017, and has the right to returnany of the snow shovels for any reason within 180 days for a full

On July 15, 2017 Matrix Corp sells 20,000 snoe shovels to a distributor for $15 per shovel. The distributor pays the amount on July 15, 2017, and has the right to returnany of the snow shovels for any reason within 180 days for a full

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 6MC

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The Goodson Company is a chain of retail electronics stores. How much of a loss can Goodson deduct in each of the following cases? Explain. a. An employee drops a 65-inch 3D television, cracking the plastic casing on the back. The television normally sells for 3,300. The cost of the set is 2,400, and Goodson sells the damaged set for 1,500. b. The company replaces its inventory system. The old system cost 45,000 and has a basis of 16,000. The company sells the old system for 7,500. The new system costs 75,000. c. A flood damages one of Goodsons retail stores. The building suffers extensive water damage. The basis of the building is 60,000, and the cost of repairing the damage is 72,000. The insurance company reimburses Goodson 50,000. d. The owner of Goodson sells a complete home entertainment center (e.g., projection TV, DVD, stereo system) to his sister for 7,000. The usual sales price is 8,500. The system costs 6,300. e. Assume the same facts as in part d, except that the owner sells the home entertainment center to his sister for 5,500. f. The owner of Goodson finds that the controller has embezzled 10,000 from the company. Before the owner can confront the controller, the controller leaves town and cannot be found. g. Upon arriving at the companys headquarters, the vice president of sales finds that someone has broken in and stolen three computers. The damage to the outside door is extensive. The cost of repairing the door is 1,500, and the cost of replacing the three computers is 9,500. The original cost of the computers totals 10,500. Goodsons basis in the computers is 5,000. The thieves also stole 350 from the petty cash fund. Goodson files a claim with its insurance company and receives 4,800.
Stellar Inc. sells an irrigation system that cost $184,000 to McGraw Company for $365,000 on March 2, 2017. The sales price includes an installation fee. The standalone price of the installation fee is $54,000. The standalone price of the irrigation system is $344,000. The installation is considered a separate performance obligation and is expected to take 3 months to complete.
On January 1, 2030, KKK consigned 300 units of gaming keyboards to SSS Each keyboard costs P400 and is sold at 50% above cost. After selling 200 keyboards, the remaining 200 units were repaired for some defects for P4,000. Because of this, SSS increased the selling price by P60. At the end of the month, SSS remitted P129,960 after deducting 15% commission, and reimbursable expenses of P1700 delivery expense and the P4,000 repair of the 100 units. How many consigned units were sold?
On August 1, 2014, Lleiram Corporation purchased a new machine on a deferred payment basis. A down payment of P200,000 was made and 4 annual installments of P600,000 each are to be made beginning on September 1, 2014. Terms of the contract are not normal in the industry where the same types of assets are being traded. Due to an employee strike, Flight could not install the machine immediately, thus, incurred P3,000 of storage cost. Cost of installation (excluding the storage cost) amounted to P20,000. The cash price of the machine was P2,300,000. How much should be capitalized as cost of the machine? a. 2,300,000 c. 2,323,000 b. 2,320,000 d. 2,600,000
On April 2, 2015, Montana Mining Co. pays $4,170,260 for an ore deposit containing 1,438,000 tons. The company installs machinery in the mine costing $199,600, with an estimated seven-year life and no salvage value. The machinery will be abandoned when the ore is completely mined. Montana begins mining on May 1, 2015, and mines and sells 167,800 tons of ore during the remaining eight months of 2015. Prepare the December 31, 2015, entries to record both the ore deposit depletion and the mining machinery depreciation. Mining machinery depreciation should be in proportion to the mine’s depletion. (Do not round intermediate calculations. Round your final answers to the nearest whole number.) 1. Record the year-end adjusting entry for the depletion expense of ore mine. 2. Record the year-end adjusting entry for the depreciation expense of the mining machinery.
Dowell Fishing Supply, Inc., sold $50,000 of Dowell Rods on December 15, 2021, to Bassadrome. Because of a shipping backlog, Dowell held the inventory in Dowell’s warehouse until January 12, 2022 (having assured Bassadrome that it would deliver sooner if necessary). How much revenue should Dowell recognize in 2021 for the sale to Bassadrome?
On April 1, 2014, the company incurred capital cost of $100 million in respect of themine and it is expected that the mine will be abandoned in eight years’ time.The mine is situated in a country where there is no environmental legislationobliging companies to rectify environmental damage and is it very unlikely that anysuch legislation will be enacted within eight years.It has been estimated that the cost of cleaning the site and re-planting the treeswill be $25 million if the replanting were successful at the first attempt, but it willprobably be necessary to make a further attempt, which will increase the cost by afurther $5 million. The company’s cost of capital is 10%. Explain why a provision should be made for the cost of cleaning the site.
On April 1, 2014, the company incurred capital cost of $100 million in respect of themine and it is expected that the mine will be abandoned in eight years’ time.The mine is situated in a country where there is no environmental legislationobliging companies to rectify environmental damage and is it very unlikely that anysuch legislation will be enacted within eight years. It has been estimated that the cost of the cleaning the site and re-planting the treeswill be $25 million if the replanting were successful at the first attempt, but it willprobably be necessary to make a further attempt, which will increase the cost by afurther $5 million. The company’s cost of capital is 10%. Prepare necessary journal entries for the period April 1, 2014 – March 31, 2015
On April 1, 2014, the company incurred capital cost of $100 million in respect of themine and it is expected that the mine will be abandoned in eight years’ time.The mine is situated in a country where there is no environmental legislationobliging companies to rectify environmental damage and is it very unlikely that anysuch legislation will be enacted within eight years.It has been estimated that the cost of the cleaning the site and re-planting the treeswill be $25 million if the replanting were successful at the first attempt, but it willprobably be necessary to make a further attempt, which will increase the cost by afurther $5 million. The company’s cost of capital is 10%.
During 2015, AD Company signed a non-cancelable contract with BARD Company to purchase 5,000, 50-kilos sacks of rice at P1,700 per sack with delivery to be made on June 1, 2020. On December 31, 2015, the price of rice had fallen to P1,680 per sack. On June 1, 2016, the price per sack of rice has further decrease to P1,540. In A’s December 31,2016 profit and loss, how much is reported as loss on purchase commitments?
On March 10, 2017, Steele Company sold to Barr Hardware 200 tool sets at a price of $50 each (cost $30 per set) with terms of n/60, f.o.b. shipping point. Steele allows Barr to return any unused tool sets within 60 days of purchase. Steele estimates that (1) 10 sets will be returned, (2) the cost of recovering the products will be immaterial, and (3) the returned tools sets can be resold at a profit. On March 25, 2017, Barr returned six tool sets and received a credit to its account. Assume that instead of selling the tool sets on credit, that Steele sold them for cash.Instructions(a) Prepare journal entries for Steele to record (1) the sale on March 10, 2017, (2) the return on March 25, 2017, and (c) any adjusting entries required on March 31, 2017 (when Steele prepares financial statements). Steele believes the original estimate of returns is correct.(b) Indicate the income statement and balance sheet reporting by Steele at March 31, 2017, of the information related to the Barr sale.
On June 30, 2016, a fire in Jeremy Company's plant caused the total loss of a production machine. The machine was being depreciated at P20,000 annually. And had a carrying amount of P160,000 on December 31, 2015. On the date of the fire, the fair value of the machine was P220,000 and Jeremy received insurance proceeds of P200,000 in October 2016. In its income statement for the year ended December 31, 2016, what amount should Jeremy recognize as a gain or loss on disposition? Answer: