Problem 12-12 (IAA)On November 15, 2020, Diamond Company entered into acommitment to purchase 10,000 ounces of gold on February15, 2021 at a price of P310 per ounce.On December 31, 2020, the market price of gold is P270 perounce. On February 15, 2021, the price of gold is P300 perounce.1. What is the loss on purchase commitment to be recognizedon December 31, 2020?400,000b. 100,000300,000d.a.с.2. What is the gain on purchase commitment to berecognized on February 15, 2021?400,000b. 300,000100,000d.a.с.0.3. What amount should be debited to purchases onFebruary 15, 2021?a. 3,000,000b. 3,100,000c. 2,700,000d. 3,500,0004. What amount should be recognized as accounts payableon February 15, 2021?a. 2,700,000b. 3,100,000c. 3,500,000d. 3,000,000

1) Loss on purchase commitment to be recognized on December 31, 2020: = (Market price at December…

Problem 12-12 (IAA) On November 15, 2020, Diamond Company entered commitment to purchase 10,000 ounces of gold on Fe 15, 2021 at a price of P310 per ounce. On December 31, 2020, the market price of gold is PS ounce. On February 15, 2021, the price of gold is PS ounce. 1. What is the loss on purchase commitment to be reco on December 31, 2020? a. 400,000 b. 100,000 300,000 d. с. 0. 2. What is the gain on purchase commitment recognized on February 15, 2021? 400,000 b. 300,000 100,000 d. a. с. 3. What amount should be debited to purchase February 15, 2021? a. 3,000,000 b. 3,100,000 c. 2,700,000

Problem 12-12 (IAA) On November 15, 2020, Diamond Company entered commitment to purchase 10,000 ounces of gold on Fe 15, 2021 at a price of P310 per ounce. On December 31, 2020, the market price of gold is PS ounce. On February 15, 2021, the price of gold is PS ounce. 1. What is the loss on purchase commitment to be reco on December 31, 2020? a. 400,000 b. 100,000 300,000 d. с. 0. 2. What is the gain on purchase commitment recognized on February 15, 2021? 400,000 b. 300,000 100,000 d. a. с. 3. What amount should be debited to purchase February 15, 2021? a. 3,000,000 b. 3,100,000 c. 2,700,000

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 106.2C

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On November 15, 2020, Diamond Company entered into a commitment to purchase 10,000 ounces of gold on February 15, 2021 at a price of P310 per ounce. On December 31, 2020, the market price of gold is P270 per share ounce. On February 15, 2021, the price of gold is P300 per ounce. 1. What is the loss on purchase commitment to be recognized on December 31, 2020? a. 400,000 b. 100,000 c. 300,000 d. 0 2. What is the gain on purchase commitment to be recognized on February 15, 2021? a. 400,000 b. 300,000 c. 100,000 d. 0 3. What amount should be debited to purchases on February 15, 2021? a. 3,000,000 b. 3,100,000 c. 2,700,000 d. 3,500,000 4. What amount should be recognized as accounts payable on February 15, 2021? a. 2,700,000 b. 3,100,000 c. 3,500,000 d. 3,000,000
On November 15, 2020, Diamond Company entered into a commitment to purchase 10,000 ounces of gold on February 15, 2021 at a price of P310 per ounce. On December 31, 2020, the market price of gold is P270 per share ounce. On February 15, 2021, the price of gold is P300 per ounce. 1. What amount should be recognized as accounts payable on February 15, 2021? a. 2,700,000 b. 3,100,000 c. 3,500,000 d. 3,000,000
Exercise 14-17 Presented below are two independent situations:(a) On January 1, 2020, Sage Inc. purchased land that had an assessed value of $349,000 at the time of purchase. A $571,000, zero-interest-bearing note due January 1, 2023, was given in exchange. There was no established exchange price for the land, nor a ready fair value for the note. The interest rate charged on a note of this type is 12%.Determine at what amount the land should be recorded at January 1, 2020, and the interest expense to be reported in 2020 related to this transaction. (Round answers to 0 decimal places, e.g. 38,548.) Land to be recorded at January 1, 2020 $ Interest expense to be reported $ (b) On January 1, 2020, Pronghorn Furniture borrowed $4,500,000 (face value) from Sinise Co., a major customer, through a zero-interest-bearing note due in 4 years. Because the note was zero-interest-bearing, Pronghorn Furniture agreed to sell furniture to this customer at lower than market…
Exercise 14-17 Presented below are two independent situations:(a) On January 1, 2020, Wildhorse Inc. purchased land that had an assessed value of $322,000 at the time of purchase. A $517,000, zero-interest-bearing note due January 1, 2023, was given in exchange. There was no established exchange price for the land, nor a ready fair value for the note. The interest rate charged on a note of this type is 12%.Determine at what amount the land should be recorded at January 1, 2020, and the interest expense to be reported in 2020 related to this transaction. (Round answers to 0 decimal places, e.g. 38,548.) Land to be recorded at January 1, 2020 $ Interest expense to be reported $ (b) On January 1, 2020, Sheffield Furniture borrowed $6,100,000 (face value) from Sinise Co., a major customer, through a zero-interest-bearing note due in 4 years. Because the note was zero-interest-bearing, Sheffield Furniture agreed to sell furniture to this customer at lower than market…
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?
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57. On April 1, 2028, A Company issued a P 9,000,000 non-interest-bearing note due March 31, 2031, for a piece of land with a cash price of P 6,949,800. Effective interest rate is 9%. Determine the interest expense for the year ended December 31, 2028 Round off final answer to the nearest peso.
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40 On January 1, 2022, AA Company sold an equipment costing P5,000,000 and accumulated depreciation of P1,500,000. AA received a P1,000,000 cash and a 10%, 5-year, P7,000,000 note receivable every December 31 in equal annual installment of P1,000,000 plus interest starting December 31, 2022. Interest effective on this note when received is at 8%. How much of the note receivable is reported as current as of December 31, 2022?
Exhibit 13-03On January 1, 2017, Train, Inc. accepted an $80,000, non-interest bearing 3 year note in exchange for equipment it sold to Steam Company. Train originally purchased the equipment for $125,000, and it had a book value of $75,000 on the date of the sale. The note was non-interest-bearing. An assumed 11% interest rate is implicit in the agreement. Actual information for 11%, three periods, follows: Present value of 1 0.73119 Present value of annuity of 1 2.44371 Refer to Exhibit 13-03. What amount should Train record for the discount on Notes Receivable? $21,505 $58,495 $0 $16,505
Problem # 1 (30): Given: On Sep 1, 2017 General Assembly (GA) purchased for $980,000 an ANSONIA 7300 wide-corridor stacking modulator with the expectation that its economic life would be exhausted at 2024 12 31 and that the unit’s salvage value would be $320,000. On 2020 11 01 GA exchanged the equipment for a 4-year, zero-coupon note with a face value of $900,000. GA recognized a loss of $16,100 on the transaction. GA uses SLN for depreciation and prorating for partial periods. Required: Book the 12/31/2020 interest accrual for the note.