Concord Company signed a long-term noncancelable purchase commitment with a major supplier to purchase raw materials in 2021 at a cost of $1,024,100. At December 31, 2021, the raw materials to be purchased have a market value of $978,600. Prepare any necessary December 31, 2021 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 0 for the amounts.)

Question

Josephine Mckee

Business

18 November, 02:34

Concord Company signed a long-term noncancelable purchase commitment with a major supplier to purchase raw materials in 2021 at a cost of $1,024,100. At December 31, 2021, the raw materials to be purchased have a market value of $978,600. Prepare any necessary December 31, 2021 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 0 for the amounts.)

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Finley Walter · Answer 1

Dr Unrealized Holding Gain or Loss - Income 45,500

Cr Estimated Liability on Purchase Commitments 45,500

Explanation:

Concord Company

Journal entry

Dr Unrealized Holding Gain or Loss - Income 45,500

Cr Estimated Liability on Purchase Commitments 45,500

Estimated Liability on Purchase Commitments = ($1,024,100 - $978,600) = $45,500