Question 130/0.5 ptsOn September 1, 2018, Bauer Inc. has 10,000 ounces of silver, with an average cost of $13 per ounce, in inventory. Thespot price for silver is $16 per ounce. Bauer decides to retain the inventory until mid-January 2019, hoping that theprice increases to $17 per ounce. To hedge its position, Bauer sells future contracts to sell 10,000 ounces of silver at $17per ounce on January 20, 2019. The firm applies fair value hedge accounting. The market spot rates and future prices forsilver are as follows:January 20Spot Price2019 FuturePriceSeptember 1,$ 16$ 172018December31, 2018January 20,2019$14.50$15.50$ 16.80$ 16.80What is the carrying value of Bauer's inventory of silver on 12/31/2018?HINT: Record the initial value of the inventory and then any adjustments due to hedge accounting journal entries.$130,000nswer$115,000$105,000$145,000weredNone of the above.

The objective of the question is to calculate the carrying value of Bauer's inventory of silver on…

Answered: Question 13 0/0.5 pts On September 1,…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA3: Time Value Of Money

Section: Chapter Questions

Problem 16E

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Question 19: On 31 Dec, 2014, Merigo Co sold goods to a customer for $10 million, representing a mark-up on cost of 25%; in order to encourage sales, Merigo Co has given the customer interest free credit with the total amount becoming payable in three years time. Interest rates are currently 4% per annum, meaning that the present value of $ 10 million is $8.9 million and the present value of $ 8 million is $7.1 million. What amount should Merigo Co record as revenue in the statement of profit or loss for the year ended 31 December 2014? og
Problem 23National Bank loaned 5,000,000 to Bank net company on Jan. 1, 2018. The terms of the loan require principal payment of 1,000,000 each year for 5 years plus interest at 10%. The first principal and interest payment is due on Dec. 31, 2018. National Bank made the required payments on Dec. 31, 2018 and Dec. 31, 2019. However during 2020, Bank net began to experience financial difficulties and was unable to make the required principal and interest payment on Dec. 31, 2020. National bank projected the cash flows from the loan as of Dec. 31, 2020 as follows: Dec. 31, 2021, 500,000, Dec. 31, 2022, 1,000,000 and Dec. 31, 2023 1,500,000. At 10% PV factors are .9091 for one period, .8264 for two periods, and .7513 for three periods. What is the entry to recognize the impairment loss?
62 In August 2021, Commonlo Corp. commits to selling 100 of its merchandise to M&H Co. for P30,000 (P300 per product). The merchandise is to be delivered to M&H over the next 6 months. After 60 merchandises were delivered, the contract is modified and Commonlo promises to deliver 80 more products for an additional P21,600 (P270 per station). At year-end, Commonlo delivered an additional 90 products. All sales are cash on delivery. How much revenue will be recognized on the contract for the year 2021?
In a Nutshell Problem 21 On December 31,2019, Innovation Company sold a machinery costing P5,200,000 which had a carrying amount of P2,200,000 for P3,000,000. The terms of the sales were P600,000 down payment and P1,200,000 payable on December 31 of the next two years. The sale agreement made no mention of interest. However, 9% would be a fair rate for this type of transaction. The present value of an ordinary annuity of 1 at 9% for two years is 1.76. Required: 1. Prepare journal entries for 2019, 2020 and 2021. 2. Determine the carrying amount of the note receivable on December 31,2019, December 31,2020 and December 31,2021 3. Determine the interest income for 2019,2020 and 2021.
EXERCISE I5 Lincoln Company sells its products in returnable containers.The customers are given a period of 2 years from the year of delivery to return the containers. Containers not returned within the prescribed period are considered sold at the amount of deposits forfeited. At January 1,2020, the balance of the account Refundable Deposits on Returnable Containers is P 250,000, consisting of the following: For containers delivered to customers in : 2018 P 100,000 2019 150,000 During 2020, the company received additional deposits of P 200,000 for containers delivered to customers during 2020 for return of containers amounted to P 267,000,as follows: Deliveries in 2018 P 82,000 Deliveries in 2019 T10,000 Deliveries in 2020 75,000 REQUIRED: Compute the balance of Refundable Deposits for Returnable Containers at December 31,2020.
PROBLEM 2 During 2020, ABC Co. sold 100,000 boxes of cake mix under a new sales promotional program. Each box contains one coupon. These coupons entitle the customer to a baking pan upon remittance of ten coupons and P350. The entity pays P500 per pan and P25 for handling and shipping. The entity estimated that 80% of the coupons will be redeemed even though only 50,000 coupons had been presented during 2020. Compute for the estimated liability on December 31, 2020
Current Attempt in Progress Sheridan.com sells 6700 units of its product for $490 each. The selling price includes a one-year warranty on parts. It is expected that 3% of the units will be defective and that repair costs will average $60 per unit. In the year of sale, warranty contracts are honored on 140 units for a total cost of $8400. What amount should Sheridan.com accrue on December 31 for estimated warranty costs? $8400 O $72360 O $3660 O $12060
View Policies Current Attempt in Progress Stellar Corporation sells computers under a 2-year warranty contract that requires the corporation to replace defective parts and to provide the necessary repair labor. During 2025, the corporation sells for cash 371 computers at a unit price of $2,570. On the basis of past experience, the 2-year warranty costs are estimated to be $166 for parts and $196 for labor per unit. (For simplicity, assume that all sales occurred on December 31, 2025.) The warranty is not sold separately from the computer. (a) Record any necessary journal entries in 2025. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.) Account Titles and Explanation Debit Credit
Instructions Daniels Company engaged in the following transactions during 2020: a. Purchased s25,000 of merchandise from XYZ Supplies on January 26. Amount due in full on February 28. b. Paid for 40% of the purchased merchandise (Transaction a) on February 26. c. On February 28, negotiate a payment extension with XYZ for the remainder of the balance from the January 26 purchase by signing a 1-year, 8% note. d. Borrowed S500,000 on an 8-month, 9% interest-bearing note on July 31. e. Purchased $140,000 of merchandise on August 2. Amount due in full on September 30. f. Paid for the purchased merchandise (Transaction e) on September 28. g. Received from Martel Inc. on October 4, a S60,000 deposit against a total selling price of $600,000 for services to be performed for Martel. h. Paid quarterly installments of Social Security, Medicare, and individual income tax withholdings, as shown below, on October 10. The Social Security and Medicare were previously recorded as expenses during the…
EXERCISE 13 Pierce Corporation issues gift certificates in denominations of P 300, P 500 and P 1,000.These gift certificates are redeemable in merchandise and expire one year after the issue date. The company's gross profit is an average of 30%. Based on past experience, an average of ½ of 1% of total gift certificates sold will not be redeemed by reason of expiration. The company records revenue as certificates expire. During 2020, the company sold P 2,000,000 gift certificates through its licensed distributors.At the end of the year, total redeemed gift certificates had a sales value of P I,280,000. REQUIRED: Prepare all journal entries pertaining to the above information.Assume that Pierce uses periodic inventory system.
Problem 13 On January 1, 2020, Magbaril Company sold equipment with a carrying amount of P800,000 to Macud Company. As payment, Macud gave Magbaril Company a P1,200,000 note. The note bears an interest rate of 5% and is to be repaid in three annual installments of P400,000 (plus interest on the outstanding balance). The first payment was received on December 31, 2020. The prevailing rate of interest for a note of this type at January 1 was 10% and 9% on December 31. The gain on sale of equipment is The interest income to be recognized in 2021 is
Problem 15 On December 31, 2017, Entity Z acquired Lumangyao Corporation’s P1,000,000 notes for P927,880. The market interest rate at that time was 12%. The stated interest rate was 10%, payable annually. The notes mature in five years and classified as financial asset at amortized cost. At December 31, 2019, the note is considered credit impaired. Entity Z determined that it was probable that the issuer would pay back only P600,000 of the principal at maturity. At December 31, 2020, because of the improvement in the credit rating of Lumangyao, Entity Z reassessed the collectibility of the note and now expects to collect P900,000 from Lumangyao at maturity date. The required loss allowance at Dec. 31, 2019 is The impairment gain to be recognized in 2020 is

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