At December 31, 2025, Sarasota Company has outstanding noncancelable purchase commitments for 39,500 gallons, at $3.42 per gallon, of raw material to be used in its manufacturing process. The company prices its raw material inventory at cost or market, whichever is lower, and uses a perpetual inventory system. Give the entry in January 2026, when the 39,500-gallon shipment is received, assuming that the situation given in (b2) above existed at December 31, 2025, and that the market price in January 2026 was $3.08 per gallon. Prepare the journal entry for when the materials are received in January 2026. (List all debit entries before credit entries. 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 O for the amounts.) Date Jan. 2026 Account Titles and Explanation III Debit Credit

At December 31, 2025, Sarasota Company has outstanding noncancelable purchase commitments for 39,500 gallons, at $3.42 per gallon, of raw material to be used in its manufacturing process. The company prices its raw material inventory at cost or market, whichever is lower, and uses a perpetual inventory system. Give the entry in January 2026, when the 39,500-gallon shipment is received, assuming that the situation given in (b2) above existed at December 31, 2025, and that the market price in January 2026 was $3.08 per gallon. Prepare the journal entry for when the materials are received in January 2026. (List all debit entries before credit entries. 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 O for the amounts.) Date Jan. 2026 Account Titles and Explanation III Debit Credit

Name: At December 31, 2025, Sarasota Company has outstanding noncancelable
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Description: At December 31, 2025, Sarasota Company has outstanding noncancelable purchasecommitments for 39,500 gallons, at $3.42 per gallon, of raw material to be used in itsmanufacturing process. The company prices its raw material inventory at cost or market

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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At December 31, 2020, Sandhill Company has outstanding noncancelable purchase commitments for 38,000 gallons, at $3.30 per gallon, of raw material to be used in its manufacturing process. The company prices its raw material inventory at cost or market, whichever is lower. (b2) Assuming that the market price as of December 31, 2020, is $ 2.97, record the journal entry. (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 O for the amounts. Round answers to 0 decimal places, eg. 6,225.) Date Account Titles and Explanation Debit Credit Dec. 31
At December 31, 2020, Grouper Company has outstanding noncancelable purchase commitments for 39.500 gallons, at $4.02 per gallon, of raw material to be used in its manufacturing process. The company prices its raw material inventory at cost or market. whichever is lower. Your answer is partially correct. Assuming that the market price as of December 31, 2020, is $3.62, record the journal entry. (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 O for the aniounts. Round answers to 0 decimal places, eg. 6,225) Date Account Titles and Explanation Debit Credit Dec. 31 Unrealized Holding Gain or Loss-Income Estimated Liability on Purchase Commitments
At December 31, 2020, Ashley Co. has outstanding purchase commitments for 150,000 gallons, at $6.20 per gallon, of a raw material to be used in its manufacturing process. The company prices its raw material inventory at cost or market, whichever is lower. Assuming that the market price as of December 31, 2020, is $5.90, how would you treat this situation in the accounts?
At December 31, 2020, Indigo Girls Company has outstanding noncancelable purchase commitments for 36,000 gallons, at $3.00 per gallon, of raw material to be used in its manufacturing process. The company prices its raw material inventory at cost or market, whichever is lower.Instructionsa. Assuming that the market price as of December 31, 2020, is $3.30, how would this matter be treated in the accounts and statements? Explain.b. Assuming that the market price as of December 31, 2020, is $2.70, instead of $3.30, how would you treat this situation in the accounts and statements?c. Give the entry in January 2021, when the 36,000-gallon shipment is received, assuming that the situation given in (b) above existed at December 31, 2020, and that the market price in January 2021 was $2.70 per gallon. Give an explanation of your treatment.
Splish Company signed a long-term noncancelable purchase commitment with a major supplier to purchase raw materials in 2021 at a cost of $905,300. On December 31, 2020, the raw materials to be purchased have a market value of $854,700. In 2021, Splish paid $905,300 to obtain the raw materials which were worth $854,700. Splish uses a periodic inventory system.Prepare the entry to record the purchase.
Wolfpack Corp. has the following normal account balances on 12/31/22 before the year-end adjustment to convert the cost of its inventory to LIFO using the DVL method. Inventory (at FIFO costs) - $700,000 Debit Lifo reserve - 25,000 credit At the end of 2022, Wolfpack computes the cost of its ending inventory to be $680,000 when using the DVL method. In the journal below, prepare the year-end entry to adjust inventory.
Jungkook Corp. has reported an inventory balance of P2,500,000 (based on physical count on January 5, 2021) by end of year 2020. As the company’s auditor, you have noted of the following transactions: • Goods shipped to Jungkook F.O.B. destination on December 28, 2019 were received on January 5, 2021. Based on the provided invoice, this costs P300,000 and is physically counted as part of the initial inventory balance. • There are also goods amounting to P250,000 which you have learned later on, has been held on consignment from a major consignor of Jungkook Corp. This is as well physically counted as part of the initial inventory balance. • Merchandise with cost of P100,000 was already in-transit to a customer, F.O.B shipping point on December 30, 2020. It arrived on January 4, 2021. Since it has already been shipped before the physical count on January 5, the merchandise is not included in the initial inventory balance. • You also have noted that P150,000 worth of merchandise has not…
In November 2024, the Brunswick Company signed two purchase commitments. The first commitment requires Brunswick to purchase 19,000 units of inventory at $16 per unit by December 15, 2024. The second commitment requires the company to purchase 29,000 units of inventory at $17 per unit by March 15, 2025. Brunswick's fiscal year-end is December 31. The company uses a periodic inventory system. Both contracts were exercised on their expiration date. 1. Prepare the journal entry to record the December 15 purchase for cash assuming the following alternative unit market prices on that date: a. $16.50 b. $15.50 2. Prepare any necessary adjusting entry at December 31, 2024, for the second purchase commitment assuming the following alternative unit market prices on that date: a. $18.50 b. $16.30 3. Assuming that the unit market price on December 31, 2024, was $16.30, prepare the journal entry to record the purchase on March 15, 2025, assuming the following alternative unit market prices on that…
On September 5, 2024, Howard Corporation signed a purchase commitment to purchase inventory for $137, 000 on or before March 31, 2025. The company's fiscal year-end is December 31. The contract was exercised on March 4, 2025, and the inventory was purchased for cash at the contract price. On the purchase date of March 4, 2025, the market price of the inventory was $121, 600. The market price of the inventory on December 31, 2024, was 5126,300. The company uses a perpetual inventory system. Required: Prepare the necessary adjusting journal entry (if any is required) on December 31, 2024. Prepare the journal to record the purchase on March 4, 2025.
The December 31, 2024, year-end inventory balance of the Almond Corporation is $212,000. You have been asked to review the following transactions to determine if they have been correctly recorded. Goods shipped to Almond f.o.b. destination on December 26, 2024, were received on January 2, 2025. The invoice cost of $31,000 is included in the preliminary inventory balance. At year-end, Almond held $15,000 of inventory on consignment from the Hardgrove Company. This inventory is included in the preliminary inventory balance. On December 29, inventory costing $6,100 was shipped to a customer f.o.b. shipping point and arrived at the customer’s location on January 3, 2025. The inventory is not included in the preliminary inventory balance. At year-end, Almond had inventory costing $16,000 on consignment with the Juniper Corporation. The inventory is not included in the preliminary inventory balance. Deteretermine the correct inventory amount to be reported in Almond’s 2024 balance sheet.
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