Question

Riley Inc. receives nonrefundable advance payments with special orders for containers constructed to customer specifications. Related information for 2021 is as follows ($ in millions):

Customer advances balance, Dec. 31, 2020	$	118
Advances received with 2021 orders		195
Advances applicable to orders shipped in 2021		188
Advances from orders canceled in 2021		46

What amount should Lake report as a current liability for advances from customers in its Dec. 31, 2021, balance sheet?

Multiple Choice

• $125 million.

• $0.

• $313 million.

• $79 million.

Answer 1

Correct answer------------$79 million.

Working

Customer advances balance, Dec. 31, 2020	$   118.00
Add: Advances received with 2021 orders	$   195.00
Total advances	$   313.00
Less: Advances applicable to orders shipped in 2021	$ (188.00)
Less: Advances from orders canceled in 2021	$   (46.00)
Customer advances balance, Dec. 31, 2021	$      79.00

It is assumed that Advances from orders canceled in 2021 are repaid to customer.