During the Current Fiscal Year, Jeremiah Corp

question 2

Multiple Choice

During the current fiscal year, Jeremiah Corp. signed a long-term noncancellable purchase commitment with its primary supplier. Jeremiah agreed to purchase $1.5 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 $1.2 million. What is the journal entry at the end of the current fiscal year?

• A) Debit Unrealized Holding Gain or Loss for $300,000 and credit Estimated Liability on Purchase Commitment for $300,000.
• B) Debit Estimated liability on Purchase Commitments for $300,000 and credit Unrealized Holding Gain or Loss for $300,000.
• C) Debit Unrealized Holding Gain or Loss for $1,200,000 and credit Estimated Liability on Purchase Commitments for $1,200,000.
• D) No journal entry is required.

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Definitions:

Complex Visuals

Intricate graphics or images that communicate detailed information or concepts.

Data Displays

The presentation of data in a visual format, like charts or graphs, to make information easier to understand and analyze.

Edited Photographs

Photographs that have been altered or changed from their original state, often through digital means, to enhance or adjust their appearance.

Pie Chart

A circular chart whose sections represent percentages of a given quantity.