PROBLEM 14 (Adapted) Mimi Company has been having difficulty obtaining necessary raw materials for its manufacturing process. The company, therefore, signed a long-term noncancelable purchase commitment with its largest supplier of this raw material on Jun3 30, 2020, at an agreed price of P800,000. On December 31, 2020, the raw material had declined in price to P720,000. Required: 1. What entry would you make on December 31, 2020, to recognize these facts? 2. Assuming that on March 31, 2021, Mimi Company purchases the raw materials. During this time, the market price of the raw materials is P810,000? P780,000? P690,000?

PROBLEM 14 (Adapted) Mimi Company has been having difficulty obtaining necessary raw materials for its manufacturing process. The company, therefore, signed a long-term noncancelable purchase commitment with its largest supplier of this raw material on Jun3 30, 2020, at an agreed price of P800,000. On December 31, 2020, the raw material had declined in price to P720,000. Required: 1. What entry would you make on December 31, 2020, to recognize these facts? 2. Assuming that on March 31, 2021, Mimi Company purchases the raw materials. During this time, the market price of the raw materials is P810,000? P780,000? P690,000?

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter7: Deductions And Losses: Certain Business Expenses And Losses

Section: Chapter Questions

Problem 40P

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PROBLEM 14 (Adapted)Mimi Company has been having difficulty obtaining necessary raw materials for its manufacturing process. The company, therefore, signed a long-term noncancelable purchase commitment with its largest supplier of this raw material on Jun3 30, 2020, at an agreed price of P800,000. On December31, 2020, the raw material had declined in price to P720,000. Required:1. Assuming that on March 31, 2021, Mimi Company purchases the raw materials. During this time, the market price of the raw materials is P810,000? P780,000? P690,000?
Problem 11 The following consignment-related transactions were made by Juno Company in December 2020:  Consigned to Atlan Company 10,000 units of tools at P500 each and paid freight ofP50,000. Each unit costs P200. They agreed that Atlan’s commission is P10 per unit. Bythe end of the year, only 2,000 units remained unsold by Atlan. Consigned 5,000 units of tools to Skye at P600 each and paid freight of P50,000. Totalcost of the consigned items was P1,500,000. Skye agreed to undertake the consignmentif she will get a commission of 10% per unit sold. By the end of the year, only 2,000 unitswere sold by Skye. Assuming that Juno Company maintains its inventory records using the perpetual inventorysystem, prepare the journal entry to record the sales when Atlan and Skye remitted their sales.Prepare separate entry for each consignee
56 On February 20, 2022, ABC Construction Company entered into a fixed-price contract to construct a commercial building for P9,000,000. ABC determined that the performance obligation is satisfied over time. Information relating to the contract is as follows: 2022 2023 Percentage of completion 25% 75% Estimated costs at completion P6,750,000 P7,200,000 How much is the contract costs charged to profit or loss in 2022? On February 20, 2022, ABC Construction Company entered into a fixed-price contract to construct a commercial building for P9,000,000. ABC determined that the performance obligation is satisfied over time. Information relating to the contract is as follows: 2022 2023 Percentage of completion 25% 75% Estimated costs at completion P6,750,000 P7,200,000 How much is the contract costs charged to profit or loss in 2022?
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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?
Exercise 12-16 b-c Blossom Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2019, the company expends $325,500 on a research project, but by the end of 2019 it is impossible to determine whether any benefit will be derived from it. The project is completed in 2020, and a successful patent is obtained. The R&D costs to complete the project are $115,500. The administrative and legal expenses incurred in obtaining patent number 472-1001-84 in 2020 total $17,500. The patent has an expected useful life of 5 years. Record these costs in journal entry form. Also, record patent amortization (full year) in 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit…
43. On February 20, 2022, ABC Construction Company entered into a fixed-price contract to construct a commercial building for P9,000,000. ABC determined that the performance obligation is satisfied over time. Information relating to the contract is as follows: 2022 2023 Percentage of completion 25% 75% Estimated costs at completion P6,750,000 P7,200,000 How much is the contract costs charged to profit or loss in 2022?
(Purchase Commitments) Marvin Gaye Company has been having difficulty obtaining key raw materials for its manufacturing process. The company therefore signed a long-term noncancelable purchase commitment with its largest supplier of this raw material on November 30, 2017, at an agreed price of $400,000. At December 31, 2017, the raw material had declined in price to $365,000.InstructionsWhat entry would you make on December 31, 2017, to recognize these facts?
42. ABC, Inc. works on a P5,250,000 contract in 2022 to construct an office building. During 2022, ABC, Inc. uses the cost to cost method. At December 31, 2022, the balances in certain accounts were: Construction in progress – P1,890,000; accounts receivable – P180,000; and billings on construction in process – P900,000; contract retention – P90,000; mobilization fee – P70,000. At December 31,2022, the estimated costs to completion are P2,352,000. How much is the realized gross profit in 2022?
40. Grapes Company provided the following selected transactions related to contingencies. The fiscal year ends on December 31, 2023. Financial statements were issued on April 1, 2024. In December 2023, Grapes became aware of an engineering flaw in a product that poses a potential risk of injury. As a result, a product recall appears inevitable. This move would likely cost the entity P2,800,000. In November 2023, the City of Manila filed suit against the entity. Grapes government is asking civil penalties and injunctive relief for violations of clean water laws. Grapes reached a settlement with the city Government to pay P3,200,000 in penalties on February 15, 2024. Grapes is the plaintiff in a P4,000,000 lawsuit filed against a customer for costs and lost profit from contract rejected in 2023. The attorney advised that it is probable that Grapes will be awarded P3,000,000. On March 20, 2024, Grapes won the case and received P3,500,000. What amount should be reported…
Marvin Gaye Company has been having difficulty obtaining key raw materials for its manufacturing process. The company therefore signed a long-term noncancelable purchase commitment with its largest supplier of this raw material on November 30, 2020, at an agreed price of $400,000. At December 31, 2020, the raw material had declined in price to $365,000. Instructions What entry would you make on December 31, 2020, to recognize these facts?
Hw.149. MidMan, Inc. is a distributor that enters into a contract in January 2020 with the manufacturer of Product B. Under the contract, MidMan receives a performance bonus of $800,000 at the end of 2020 if MidMan achieves a milestone of purchasing $5 million of Product B from the manufacturer by December 31, 2020. Historically, the probability of achieving the milestones required to earn the annual bonus has been 100% and MidMan has achieved milestones and received performance bonuses from the manufacturer with respect to similar contracts performed previously. a. What should MidMan do with the $800,000? b. If MidMan should recognize the $800,000, how and when should it be recognized? c. How much revenue will have been recognized by February 29, 2020?