On October 15, 2020, Teal Co. purchased 3,920 barrels of fuel oil with a cost of $246,960 ($63 per barrel). Teal is holding this inventory in anticipation of the winter 2021 heating season. Teal 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, Teal also purchased a put option on the fuel oil. Teal paid an option premium of $280 for the put option, which gives Teal the option to sell 3,920 barrels of fuel oil at a strike price of $63 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 October 31, 2020 November 30, 2020 December 31, 2020 Market Price of Fuel Oil $61 per gallon 60 per gallon 57 per gallon Time Value of Put Option $174 96 41

On October 15, 2020, Teal Co. purchased 3,920 barrels of fuel oil with a cost of $246,960 ($63 per barrel). Teal is holding this inventory in anticipation of the winter 2021 heating season. Teal 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, Teal also purchased a put option on the fuel oil. Teal paid an option premium of $280 for the put option, which gives Teal the option to sell 3,920 barrels of fuel oil at a strike price of $63 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 October 31, 2020 November 30, 2020 December 31, 2020 Market Price of Fuel Oil $61 per gallon 60 per gallon 57 per gallon Time Value of Put Option $174 96 41

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

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 11P

See similar textbooks

Similar questions

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 2020, Sheffield Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Sheffield for a lump sum of $41,895 because it is discontinuing manufacturing operations and wishes to dispose of its entire stock. Three types of chairs are included in the carload. The three types and the estimated selling price for each are listed below. \table[[Type,No. of Chairs,\table[[Estimated Selling],[Price Each]]],[Lounge chairs,280,$90
On November 15, 2021, Marsyl Company entered into a commitment to purchase 100,000 barrels ofaviation fuel for P55 per barrel on March 31, 2022. The company entered into this purchasecommitment to protect itself against the volatility in the aviation fuel market. By December 31, 2021,the purchase price of aviation fuel had fallen to P50 per barrel. However, by March 31, 2022, whenthe company took delivery of the 100,000 barrels, the price of the aviation fuel had risen to P58 perbarrel. How much should be recognized as gain on purchase commitment for the year 2021? The following information has been extracted from the records of Marie Company about one of itsproducts:Units Unit Cost Total CostJan. 1 Beg. balance 10,000 150 P1,500,000Jan. 5 Purchase 10,000 180 1,800,000Jan. 15 Sale 15,000Jan. 16 Sales return 1,000Jan. 25 Purchase 4,000 200 800,000Jan. 26 Purchase return 500 200 100,000 Aditional questions: Under the FIFO, the cost of ending inventory and cost of goods sold should,…
On November 15, 2021, Marsyl Company entered into a commitment to purchase 100,000 barrels ofaviation fuel for P55 per barrel on March 31, 2022. The company entered into this purchasecommitment to protect itself against the volatility in the aviation fuel market. By December 31, 2021,the purchase price of aviation fuel had fallen to P50 per barrel. However, by March 31, 2022, whenthe company took delivery of the 100,000 barrels, the price of the aviation fuel had risen to P58 perbarrel. How much should be recognized as gain on purchase commitment for the year 2021?
On November 15, 2021, Marsyl Company entered into a commitment to purchase 100,000 barrels ofaviation fuel for P55 per barrel on March 31, 2022. The company entered into this purchasecommitment to protect itself against the volatility in the aviation fuel market. By December 31, 2021,the purchase price of aviation fuel had fallen to P50 per barrel. However, by March 31, 2022, whenthe company took delivery of the 100,000 barrels, the price of the aviation fuel had risen to P58 perbarrel. How much should be recognized as gain on purchase commitment for the year 2021? The following information has been extracted from the records of Marie Company about one of itsproducts: Units Unit Cost Total CostJan. 1 Beg. balance 10,000 150 P1,500,000Jan. 5 Purchase 10,000…
Maximus Company sold its inventory for P300,000 to Maxwell on January 2,2021 and received a one year Note bearing an interest rate or 12% for the full amount. On December 31,2021, Maxim determined based on Maxwell’s recent financial crisis, there’s a delay and change in the pattern of collection. The delay and change in the pattern show’s that P150,000 will be due on December 31, 2022 and 100,000 will be due on December 31,2023. What amount of impairment loss should Maxwell Company recognized on December 31,2021? none P86,000 P122,352 P136,701
During 2020, Sage Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Sage for a lump sum of $83,790 because it is discontinuing manufacturing operations and wishes to dispose of its entire stock. Three types of chairs are included in the carload. The three types and the estimated selling price for each are listed below. Type No. of Chairs Estimated SellingPrice Each Lounge chairs 560 $90 Armchairs 420 80 Straight chairs 980 50 During 2020, Sage sells 280 lounge chairs, 140 armchairs, and 168 straight chairs.What is the amount of gross profit realized during 2020? What is the amount of inventory of unsold straight chairs on December 31, 2020? (Round cost per chair to 2 decimal places, e.g. 78.25 and final answer to 0 decimal places, e.g. 5,845.)
During 2020, Martinez Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Martinez for a lump sum of $113,715 because it is discontinuing manufacturing operations and wishes to dispose of its entire stock. Three types of chairs are included in the carload. The three types and the estimated selling price for each are listed below. Type No. of Chairs Estimated SellingPrice Each Lounge chairs 720 $90 Armchairs 540 80 Straight chairs 1,260 50 During 2020, Martinez sells 380 lounge chairs, 190 armchairs, and 228 straight chairs.What is the amount of gross profit realized during 2020? What is the amount of inventory of unsold straight chairs on December 31, 2020? (Round cost per chair to 2 decimal places, e.g. 78.25 and final answer to 0 decimal places, e.g. 5,845.) Gross profit realized during 2020 $enter a dollar amount Amount of inventory of unsold straight chairs $enter a dollar…
During 2020, Sarasota Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Sarasota for a lump sum of $107,730 because it is discontinuing manufacturing operations and wishes to dispose of its entire stock. Three types of chairs are included in the carload. The three types and the estimated selling price for each are listed below. Type No. of Chairs Estimated SellingPrice Each Lounge chairs 720 $90 Armchairs 540 80 Straight chairs 1,260 50 During 2020, Sarasota sells 360 lounge chairs, 180 armchairs, and 216 straight chairs.What is the amount of gross profit realized during 2020? What is the amount of inventory of unsold straight chairs on December 31, 2020? (Do not round relative sales price. Round cost per chair to 2 decimal places, e.g. 78.25 and final answer to 0 decimal places, e.g. 5,845.) Gross profit realized during 2020 ? Amount of inventory of unsold straight chairs ?
JAY Inc. decided to revalue its machine on December 31, 2019, and determined that the current replacement cost is $1,500,000. The machine, which was purchased last January 1, 2017 for $1,000,000 has a carrying value of $400,000. The entity has been consistent in depreciating its machine using the straight-line method. On September 1, 2021, the entity sold the machine for $140.000. How much is the revaluation surplus as of December 31, 2020? A. $300,000 B. $100,000 C. $200,000 D. $550,000 Can you please answer this proven by a solution?
During 2020, Pretenders Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Pretenders for a lump sum of $59,850 because it is discontinuing manufacturing operations and wishes to dispose of its entire stock. Three types of chairs are included in the carload. The three types and the estimated selling price for each are listed below. 000 Type000 No. of Chairs Estimated Selling Price Each Lounge chairs 400000 000 $9000000000 Armchairs 000 300000 000 8000000000 Straight chairs 000 700000 000 5000000000 During 2020, Pretenders sells 200 lounge chairs, 100 armchairs, and 120 straight chairs. Instructions What is the amount of gross profit realized during 2020? What is the amount of inventory of unsold straight chairs on December 31, 2020?
On October 1, 2021, Tyeso Company entered in a noncancellable purchase commitment to purchase inventory at P3,000 per unit. The 2,500 units of inventory will be delivered on February 28, 2022. On December 31,2021, the fair value of each inventory is at P2,850. On date of delivery, each unit of inventory is selling at P2,910. A. How much is the amount of liability on purchase commitment as of December 31, 2021? B. How much is the amount of inventory recorded on February 28, 2022? C. How much is the amount of gain or loss recognized on February 28, 2022?