During the Current Fiscal Year, Jeremiah Corp

question 28

Multiple Choice

During the current fiscal year, Jeremiah Corp.signed a long-term noncancellable purchase commitment with its primary supplier.Jeremiah agreed to purchase $2.5 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 $2.3 million.What is the journal entry at the end of the current fiscal year?

• A)Debit Unrealized Holding Loss for $200,000 and credit Purchase Commitment Liability for $200,000.
• B)Debit Purchase Commitment Liability for $200,000 and credit Unrealized Holding Gain for $200,000.
• C)Debit Unrealized Holding Loss for $2,300,000 and credit Purchase Commitment Liability for $2,300,000.
• D)No journal entry is required.

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The portion of a person's income that remains available for spending, investment, or savings once taxes and essential personal expenses have been deducted.

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