INT. ACCOUNTING<CUSTOM>W/CONNECT 2-YEA
8th Edition
ISBN: 9781259767074
Author: SPICELAND
Publisher: MCG CUSTOM
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 5, Problem 5.16BE
Payment s by the seller to the customer
• LO5–6
Lewis Co. sold merchandise to AdCo for $60,000 and received $60,000 for that sale one month later. One week prior to receiving payment from AdCo, Lewis made a $10,000 payment to AdCo for advertising services that have a fair value of $7,500. After accounting for any necessary adjustments, how much revenue should Lewis Co. record for the merchandise sold to AdCo?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Q#5 .
On January 1, 2021, The Barrett Company purchased merchandise from a supplier. Payment was a noninterest-bearing note requiring five annual payments of $22,000 on each December 31 beginning on December 31, 2021, and a lump-sum payment of $120,000 on December 31, 2025. A 12% interest rate properly reflects the time value of money in this situation. ((FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)Required:Calculate the amount at which Barrett should record the note payable and corresponding merchandise purchased on January 1, 2021. (Round your final answer to nearest whole dollar amount.)
Table values are based on:
n =
i =
Cash Flow
Amount
Present Value
Payments
Lump Sum
Amount recorded
IA
9. Problem Solving. A promissory note which is dated October 1, 20A was received from a client for service delivered by the ML Company for P450,500. Its term is 90 days and carries with it an 12% interest. On November 15, 20A, due to financial difficulty, ML company have the client’s promissory note discounted to a C19 Financing even at 18% discount. Pertaining to this transaction alone, compute the net amount of increase in profit assuming the bank was paid by its client on the said due date. Although we assume 360 days a year, use the actual number of days of each month mentioned. Round off final answer to the nearest peso.
EB9. 12.4 Airplanes Unlimited purchases airplane parts from a supplier on March 19 at a quantity of 4,800 parts at $12.50 per part. Terms of the purchase are 3/10, n/30. Airplanes pays one-third of the amount due in cash on March 30 but cannot pay the remaining balance due. The supplier renegotiates the terms on April 18 and allows Airplanes to convert its purchase payment into a short-term note, with an annual interest rate of 9%, payable in six months.Show the entries for the initial purchase, the partial payment, and the conversion.
EB10. 12.4 Use information from EB9. Compute the interest expense due when Airplanes Unlimited honors the note. Show the journal entry to recognize payment of the short-term note on October 18
Chapter 5 Solutions
INT. ACCOUNTING<CUSTOM>W/CONNECT 2-YEA
Ch. 5 - What are the five key steps a company follows to...Ch. 5 - What indicators suggest that a performance...Ch. 5 - What criteria determine whether a company can...Ch. 5 - We recognize service revenue either at one point...Ch. 5 - What characteristics make a good or service a...Ch. 5 - Prob. 5.6QCh. 5 - What must a contract include for the contract to...Ch. 5 - When a contract includes an option to buy...Ch. 5 - Prob. 5.9QCh. 5 - Prob. 5.10Q
Ch. 5 - Is a customers right to return merchandise a...Ch. 5 - Prob. 5.12QCh. 5 - Under what circumstances should sellers consider...Ch. 5 - When should a seller view a payment to its...Ch. 5 - What are three methods for estimating stand-alone...Ch. 5 - When is revenue recognized with respect to...Ch. 5 - In a franchise arrangement, what are a franchisors...Ch. 5 - When does a company typically recognize revenue...Ch. 5 - Prob. 5.19QCh. 5 - Prob. 5.20QCh. 5 - Must bad debt expense be reported on its own line...Ch. 5 - Explain the difference between contract assets,...Ch. 5 - Explain how to account for revenue on a long-term...Ch. 5 - Prob. 5.24QCh. 5 - Prob. 5.25QCh. 5 - Prob. 5.26QCh. 5 - Prob. 5.27QCh. 5 - Prob. 5.28QCh. 5 - What are the two general criteria that must be...Ch. 5 - Explain why, in most cases, a seller recognizes...Ch. 5 - Revenue recognition for most installment sales...Ch. 5 - Prob. 5.32QCh. 5 - How does a company report deferred gross profit...Ch. 5 - Prob. 5.34QCh. 5 - Briefly describe the guidelines for recognizing...Ch. 5 - Prob. 5.36QCh. 5 - Briefly describe the guidelines provided by GAAP...Ch. 5 - Prob. 5.1BECh. 5 - Timing of revenue recognition LO53 Estate...Ch. 5 - Prob. 5.3BECh. 5 - Allocating the transaction price LO54 Sarjit...Ch. 5 - Prob. 5.5BECh. 5 - Performance obligations; warranties LO55 Vroom...Ch. 5 - Prob. 5.7BECh. 5 - Prob. 5.8BECh. 5 - Prob. 5.9BECh. 5 - Prob. 5.10BECh. 5 - Prob. 5.11BECh. 5 - Variable consideration LO56 Leo Consulting enters...Ch. 5 - Prob. 5.13BECh. 5 - Prob. 5.14BECh. 5 - Prob. 5.15BECh. 5 - Payment s by the seller to the customer LO56...Ch. 5 - Estimating stand-alone selling prices: adjusted...Ch. 5 - Estimating stand-alone selling prices: expected...Ch. 5 - Estimating stand-alone selling prices; residual...Ch. 5 - Prob. 5.20BECh. 5 - Prob. 5.21BECh. 5 - Prob. 5.22BECh. 5 - Prob. 5.23BECh. 5 - Prob. 5.24BECh. 5 - Contract assets and contract liabilities LO58...Ch. 5 - Prob. 5.26BECh. 5 - Long-term contract; revenue recognition over time;...Ch. 5 - Prob. 5.28BECh. 5 - Long-term contract; revenue recognition upon...Ch. 5 - Long-term contract; revenue recognition; loss on...Ch. 5 - Prob. 5.35BECh. 5 - Prob. 5.36BECh. 5 - Prob. 5.37BECh. 5 - Prob. 5.38BECh. 5 - Prob. 5.39BECh. 5 - Revenue recognition; software contracts under IFRS...Ch. 5 - Prob. 5.41BECh. 5 - BE 5–31
Receivables and inventory turnover...Ch. 5 - Prob. 5.32BECh. 5 - Prob. 5.33BECh. 5 - Prob. 5.34BECh. 5 - Prob. 5.1ECh. 5 - Ski West, Inc., operates a downhill ski area near...Ch. 5 - Allocating transaction price LO54 Video Planet...Ch. 5 - Prob. 5.4ECh. 5 - Prob. 5.5ECh. 5 - Prob. 5.6ECh. 5 - Prob. 5.7ECh. 5 - On May 1, 2016, Meta Computer, Inc., enters into a...Ch. 5 - Prob. 5.9ECh. 5 - Variable considerationmost likely amount; change...Ch. 5 - Variable considerationexpected value; change in...Ch. 5 - Prob. 5.12ECh. 5 - Approaches for estimating stand-alone selling...Ch. 5 - E 5–14
FASB codification research
LO5–6,...Ch. 5 - Prob. 5.15ECh. 5 - FASB codification research LO58 Access the FASB...Ch. 5 - Prob. 5.17ECh. 5 - Prob. 5.18ECh. 5 - Prob. 5.19ECh. 5 - Prob. 5.20ECh. 5 - Prob. 5.21ECh. 5 - Prob. 5.22ECh. 5 - Prob. 5.23ECh. 5 - Prob. 5.24ECh. 5 - Prob. 5.25ECh. 5 - Prob. 5.26ECh. 5 - Prob. 1CPACh. 5 - Prob. 2CPACh. 5 - Prob. 3CPACh. 5 - Prob. 4CPACh. 5 - Prob. 5CPACh. 5 - Prob. 6CPACh. 5 - Prob. 7CPACh. 5 - Prob. 8CPACh. 5 - Prob. 1CMACh. 5 - Prob. 5.1PCh. 5 - Prob. 5.2PCh. 5 - Prob. 5.3PCh. 5 - Prob. 5.4PCh. 5 - Prob. 5.5PCh. 5 - Prob. 5.6PCh. 5 - Prob. 5.7PCh. 5 - Prob. 5.8PCh. 5 - Prob. 5.9PCh. 5 - Prob. 5.10PCh. 5 - Prob. 5.11PCh. 5 - Prob. 5.12PCh. 5 - Prob. 5.13PCh. 5 - Prob. 5.14PCh. 5 - Prob. 5.15PCh. 5 - Prob. 5.16PCh. 5 - Prob. 5.17PCh. 5 - Prob. 5.18PCh. 5 - Prob. 5.19PCh. 5 - Prob. 5.20PCh. 5 - Prob. 5.21PCh. 5 - Prob. 5.22PCh. 5 - Prob. 5.23PCh. 5 - Prob. 5.1BYPCh. 5 - Judgment Case 52 Satisfaction of performance...Ch. 5 - Judgment Case 53 Satisfaction of performance...Ch. 5 - Prob. 5.4BYPCh. 5 - Prob. 5.5BYPCh. 5 - Prob. 5.6BYPCh. 5 - Prob. 5.8BYPCh. 5 - Prob. 5.9BYPCh. 5 - Prob. 5.10BYPCh. 5 - Prob. 5.11BYPCh. 5 - Prob. 5.12BYPCh. 5 - Prob. 5.13BYPCh. 5 - Prob. 5.15BYPCh. 5 - Prob. 5.16BYPCh. 5 - Prob. 5.17BYPCh. 5 - Prob. 5.18BYPCh. 5 - Prob. 5.19BYPCh. 5 - Prob. 5.23BYP
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Q.69. Sonic Inc., a manufacturer of power tools, decides to offer a rebate of $120 on its 16-inch mid-range chain saw, which currently has a retail price $520. Sonic Inc. estimate that, as a result of the rebate, sales of this model will increase from 60,000 to 80,000 units next year. The profit margin for Benson before the rebate is $180. Based on the given information, does it make sense for Sonic Inc. to offer the rebate? A. No, since costs are $6,000,000 more than benefits. B. No, since costs are $6,800,000 more than benefits. D. Yes, since the benefits are $7,300,000 more than the costs. C. Yes, since the benefits are $3,400,000 more than the costs. E. The answer cannot be determined based on the information given.arrow_forwardExercise 5-16 (Algo) Deferred annuities [LO5-8] President Company purchased merchandise from Captain Corporation on September 30, 2024. Payment was made in the form of a noninterest-bearing note requiring President to make six annual payments of $7,800 on each September 30, beginning on September 30, 2027. Required: Calculate the amount at which President should record the note payable and corresponding purchase on September 30, 2024, assuming that an interest rate of 9% properly reflects the time value of money in this situation. Note: Use tables, Excel, or a financial calculator. Round your final answers to nearest whole dollar amount. Round your intermediate calculations to the nearest whole dollar. (FV of $1, PV of $1, FVA of $1, PVA ofarrow_forwardblock c/2019/4 On 31.12.t1, Frieda OHG has trade receivables with a book value of € 35,700, which also includes receivables from Alma AG in the amount of € 11,900 and from Belma AG in the amount of € 5,950 . On 31.12. t0, Frieda OHG had accounted for supposedly secure receivables in the amount of € 23,800 gross. Create the posting records for the following business transactions in year t1: Frieda OHG considers it likely that only 30% of the claim against Alma AG will be received. Insolvency proceedings are opened against Belma AG and an entry rate of 80% is set by the insolvency administrator with regard to the claim of Frieda OHG. It is known from the past that approximately 2% of receivables that are not individually impaired are not paid. Alma AG transfers € 5,950 to Frieda OHGarrow_forward
- Exercise 5-16 (Algo) Deferred annuities [LO5-8] President Company purchased merchandise from Captain Corporation on September 30, 2024. Payment was made in the form of a noninterest-bearing note requiring President to make six annual payments of $5,200 on each September 30, beginning on September 30, 2027. Required: Calculate the amount at which President should record the note payable and corresponding purchase on September 30, 2024, assuming that an interest rate of 11% properly reflects the time value of money in this situation. Note: Use tables, Excel, or a financial calculator. Round your final answers to nearest whole dollar amount. Round your intermediate calculations to the nearest whole dollar. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Amount recorded:arrow_forwardPrepare all necessary entries in general journal form for Garfield Corp. E7.13 (LO 4) (Note Transactions at Unrealistic Interest Rates) On July 1, 2020, Agincourt Inc. made two sales. 1. It sold land having a fair value of $700,000 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of $1,101,460. The land is carried on Agincourt’s books at a cost of $590,000. 2. It rendered services in exchange for a 3%, 8-year promissory note having a face value of $400,000 (interest payable annually). Agincourt Inc. recently had to pay 8% interest for money that it borrowed from British National Bank. The customers in these two transactions have credit ratings that require them to borrow money at 12% interest. Instructions Record the two journal entries that should be recorded by Agincourt Inc. for the sales transactions above that took place on July 1, 2020.arrow_forwardTP5. LO 9.5 You own a construction company and have recently received a contract with the local school district to refurbish one of its elementary schools. You are given an up-front payment from the school district in the amount of $5 million. The contract terms extend from years 2018 to 2020. When would you recognize revenue for this payment? What method of accounting would you use for this construction project and why? What would be the benefits and challenges with your method selection? Give an example of your distribution selection and associated costs of the project (you may estimate based on other industry competitors). What might be some benefits and challenges associated with the other method of construction revenue recognition?arrow_forward
- Problem 12 On January 1, GEN enters into a contract with LORD for the sale of a high-end security scanner for P630,000. The contract includes a put option the obliges GEN to repurchase the scanner machine from LORD for P567,000 on or before December 31. The market value is expected to be P495,000 on December 31. LORD pays GEN P630,000 on January 1. The transaction should be accounted for as a: A. Sale C. No sale/lease B. Lease D. Cannot be determined Problem 13 Noreen INC a truck dealer, sells a truck on January 1, 2019, to Mendoza for P3,000,000. Noreen INC agrees to repurchase the truck on December 31, 2020 for P3,630,000. 1. Assuming a 10% is imputed in the agreement, how much is the liability of Tom Co on January 1, 2019? A. 1,500,000 C. 3,000,000 B. 1,815,000 D. 3,630,000 2. Using the information above, what is the interest expense for 2019? A. None C. 330,000 B. 300,000 D. 630,000 3. How much should NOREEN INC record interest and retirement of its liability to MENDOZA INC…arrow_forwardBUS 038 : Business Computations7. For terms of 8/10, n/60 determine the annual rate you, in effect, pay the supplier if you fail to pay the invoice at the end of the discount period. Express the rate with 2 decimal places. 8. An invoice for $75.20 has terms of 3/10, 1/30, n/60. If you make payment 25 days after the invoice date, what amount should you pay? 9. You purchase goods on an invoice dated July 5 with terms of 4/15, n/45 ROG. If you receive the goods on July 23, calculate (a) the last day of the discount period, and (b) the last day of the credit period. b. Last day of credit period:arrow_forwardE13.9 (LO1) (Adjusting Entry for Sales Tax and VAT) Eastwood Ranchers sells a herd ofcattle to Rozo Meat Packers for €30,000 and the related VAT. Rozo Meat Packers sells thebeef to Wrangler Supermarkets for €40,000 and the related VAT. Wrangler Supermarkets sellsthis beef to customers for €50,000 plus related VAT.Instructionsa. Assuming the VAT is 15% on all sales, prepare the journal entry to record the sale byRozo Meat Packers to Wrangler Supermarkets.b. What is the net cash outlay that Eastwood Ranchers incurs related to the VAT?arrow_forward
- hrk.4 Orange Music purchased the rights to all Fixing Benjamin's music on January 1st, 2022, for $1 million cash. On December 31st, 2022, a change in consumer tastes over the year led to the determination that future sales of Fixing Benjamin’s discography would be significantly lower than expected. One accountant estimated that music sales for the years 2023, 2024, and 2025 would be $300,000, $200,000, and $100,000, respectively, and mentioned that the appropriate discount rate for Orange Music is 7%. Record all journal entries of Orange Music for the year 2022.arrow_forwardHw.128. A business borrowed $200,000 on January 1, 2019 to be paid back on January 1 2022. On January 1, 2019, the business received an amount equal to $200,000, less discounted interest based on 11.5% per year, which is the market rate. The company closes its books every December 31. a. Prepare the journal entry for the debtor on January 1, 2019. b. Prepare the journal entry on December 31, 2020 related to this debt. Suppose that the company from the previous exercise number 4 received the full sum of $200,000 on January 1, 2019 and committed to repay the loan by making three annual payments (January 1 of 2020, 2021 and 2022) equal based on an interest rate of 11.5%.arrow_forwardP5.11 (LO 1, 3) You have just been hired as a loan officer for Washington Mutual Savings. Selig Equipment and Mountain Bike Inc. have both applied for $125,000 nine-month loans to acquire additional plant equipment. Neither company offered any security for the loans. It is the strict policy of the bank to have only $1,350,000 outstanding in unsecured loans at any point in time. Because the bank currently has $1,210,000 in unsecured loans outstanding, it will be unable to grant loans to both companies. The bank president has given you the following selected information from the companies’ loan applications. Selig Equipment Mountain Bike Inc. Cash $15,000 $160,000 Accounts receivable 215,000 470,000 Inventory 305,000 195,000 Prepaid expenses 180,000 10,000 Total current assets $715,000 $835,000 Noncurrent assets 1,455,000 1,875,000 Total assets $2,170,000 $2,710,000 Selig Equipment Mountain Bike Inc. Current liabilities $285,000 $325,000 Long-term…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
7.2 Ch 7: Notes Payable and Interest, Revenue recognition explained; Author: Accounting Prof - making it easy, The finance storyteller;https://www.youtube.com/watch?v=wMC3wCdPnRg;License: Standard YouTube License, CC-BY