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NARA [144]
2 years ago
6

During the current fiscal year, jeremiah corp. signed a long-term noncancellable purchase commitment with its primary supplier.

jeremiah agreed to purchase $2.0 million of raw materials during the next fiscal year under this contract. at the end of the current fiscal year, the raw material to be purchased under this contract had a market value of $1.6 million. what is the journal entry at the end of the current fiscal year?
a. debit unrealized holding gain or loss for $400,000 and credit estimated liability on purchase commitment for $400,000.



b. debit estimated liability on purchase commitments for $400,000 and credit unrealized holding gain or loss for $400,000.



c. debit unrealized holding gain or loss for $1,600,000 and credit estimated liability on purchase commitments for $1,600,000.



d. no journal entry is required.
Business
1 answer:
ivanzaharov [21]2 years ago
8 0

Answer:

Option A. Debit unrealized holding gain or loss for $400,000 and credit estimated liability on purchase commitment for $400,000.

Explanation:

According to the Accounting Principles losse are always debited and gains are always credited. This means that the notional loss or gain due to the decrease or increase in the value of the contract must be recorded in the current year by debit or credit respectively.

The notional gain or loss at the end of fiscal year, can be calculated by taking the difference of the Agreed value and the current market value of the contract.

The agreed value of the contract is $2,000,000 and the Market Value is $1,600,000, which means that the unrealized losses are $400,000 ($2,000,000 - $1,600,000).

The double entry would be recording the losses of $400,000 due to technologically decrease in the value:

Dr Unrealized Loss $400000  

Cr Estimated liability on Purchase Commitment  $400000

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Answer:

C : accept the offer because it will produce net income of $12,600.

Explanation:

In this question we have to compare the cost which is presented below:

In the first case

The variable cost would be

= Number of units buys × variable cost per unit

= 4,200 units × $67

= $281,400

And, the selling cost would be

= Number of units sold × selling price per unit

= 4,200 units × $70

= $294,000

So, the difference would be

= $294,000 - $281,400

= $12,600

3 0
3 years ago
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Answer: See explanation

Explanation:

1. What type of fraud is Jill committing?

The fraud that Jill is committing is known as theft of cash through fraudulent disbursements. In this case, Jill is using a register disbursement scheme which involves false voids of customer sales. During the time of sale, a record is made and another record is then created again which is used for the false void.

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To prevent this fraud, a receipt should be attached and the florist should make sure that every vital information about all sales are collected such as customers name, time, amount of goods bought, signature and f customers etc

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What do you mean what yousnap

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You and a friend are debating the merits of using monetary policy during a severe recession. Your friend says that the central b
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Answer:

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3 years ago
Atom Endeavour Co. issued $21 million face amount of 4.0% bonds when market interest rates were 4.46% for bonds of similar risk
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Answer:

A. $840,000

B. Discount

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Explanation:

Data

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Market Interest rate = 4.46%

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Requirement B: Whether it is Premium or Discount?

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Requirement C:

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