During 2014, Larue Co., a manufacturer of chocolate candies, contracted to purchase 200,000 pounds of cocoa beans at $4.00 per pound, delivery to be made in the spring of 2015. Because a record harvest is predicted for 2015, the price per pound for cocoa beans had fallen to $3.30 by December 31, 2014. Of the following journal entries, the one which would properly reflect in 2020 the effect of the commitment of Crane Co. to purchase the 249000 pounds of cocoa isCocoa Inventory 971100 Accounts Payable 971100Cocoa Inventory 809250 Loss on Purchase Commitments 161850 Accounts Payable 971100Unrealized Holding Gain or Loss-Income 161850 Estimated Liability on Purchase Commitments 161850No entry would be necessary in 20214
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