Lake CoReceives Nonrefundable Advance Payments with Special Orders for Containers Constructed

question 27

Multiple Choice

Lake Co.receives nonrefundable advance payments with special orders for containers constructed to customer specifications.Related information for 2016 is as follows ($ in millions) :
What amount should Lake report as a current liability for advances from customers in its Dec.31,2016,balance sheet?

• A)$0.
• B)$80.
• C)$125.
• D)$170.

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Definitions:

Direct Labor

The wages paid to workers who are directly involved in the production of goods or services.

Accounts Receivable Clerks

Employees responsible for managing and tracking the money owed to a business by its debtors.

Total Wages

Represents the cumulative amount of wages paid to all employees over a specific time period.

Standard Cost Formula

A calculation method used to estimate the expected cost of production under normal conditions, including direct materials, labor, and overhead costs.