On October 15, 2025, 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 2026 heating season. Oil Products accounts for its inventory at the lower-of-FIFC cost-or-net realizable value. To hedge against potential declines in the value of the inventory, Oil Products also purchased a put opti 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, 2026. The following data are available with respect to the values of the fuel of inventory and the put option.
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- Company S signs several purchase contracts in 2022. Under the terms of one contract, Company S will take delivery of the inventory, sold on account, in 2023 and pay a price of $629,000 to Company R. The fair value of the inventory at the company's December 31, 2022 year end declines to $529,000. Company S does not expect to be able to recover its additional costs. Assume that the fair value remains at $529,000 until the goods are delivered. Is this an onerous contract in 2022? If so, why? Show journal entries for 2022 and 2023. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles 2022 Loss on Purchase Contracts Liability for Onerous Contracts 2023 Debit CreditOn 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…
- Dowell Fishing Supply, Inc., sold $50,000 of Dowell Rods on December 15, 2018, to Bassadrome. Because ofa shipping backlog, Dowell held the inventory in Dowell’s warehouse until January 12, 2019 (having assuredBassadrome that it would deliver sooner if necessary). How much revenue should Dowell recognize in 2018 forthe sale to Bassadrome?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,…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
- On December 31, 2018 Berry Corporation sold some of its product to Flynn Company, accepting a 3%, four-year promissory note having a maturity value of $800,000 (interest payable annually on December 31). Berry Corporation pays 5% for its borrowed funds. Flynn Company, however, pays 8% for its borrowed funds. The product sold is carried on the books of Berry at a manufactured cost of $395,000. Assume Berry uses a perpetual inventory system. Instructions (a) Prepare the journal entries to record the transaction on the books of Berry Corporation at December 31, 2018. (Assume that the effective interest method is used. Use the interest tables below and round to the nearest dollar.) (b) Make all appropriate entries for 2019 on the books of Berry Corporation. (c) Make all appropriate entries for 2020 on the books of Berry Corporation.On November 15, 2021, Marsyl Company, a large entity, entered into a commitment to purchase 100,000 barrels of aviation fuel for P55 per barrel on March 31, 2022. The company entered into this purchase commitment 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, when the company took delivery of the 100,000 barrels, the price of the aviation fuel had risen to P58 per barrel. How much should be recognized as gain on purchase commitment for the year 2021?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
- During 2020, Whispering Furniture Company purchases a carload of wicker chairs. The manufacturer sells the chairs to Whispering 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, Whispering 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?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 ?Dowell Fishing Supply, Inc., sold $50,000 of Dowell Rods on December 15, 2021, to Bassadrome. Because of a shipping backlog, Dowell held the inventory in Dowell’s warehouse until January 12, 2022 (having assured Bassadrome that it would deliver sooner if necessary). How much revenue should Dowell recognize in 2021 for the sale to Bassadrome?