During the Prior Fiscal Year, Jeremiah Corp

question 27

Multiple Choice

During the prior fiscal year, Jeremiah Corp.signed a long-term noncancellable purchase commitment with its primary supplier to purchase $2.5 million of raw materials.Jeremiah paid the $2.5 million to acquire the raw materials when the raw materials were only worth $2.2 million.Assume that the purchase commitment was properly recorded.What is the journal entry to record the purchase?

• A)Debit Inventory for $2,200,000, and credit Cash for $2,200,000.
• B)Debit Inventory for $2,200,000, debit Unrealized Holding Loss for $300,000, and credit Cash for $2,500,000.
• C)Debit Inventory for $2,200,000, debit Purchase Commitment Liability for $300,000 and credit Cash for $2,500,000.
• D)Debit Inventory for $2,500,000, and credit Cash for $2,500,000.

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Definitions:

Organogenesis

The phase of embryonic development concerned with the formation and differentiation of organs.

Endothelial Tubes

Structures formed by endothelial cells lining the interior surface of blood vessels and lymphatics, crucial for vascular function.

Secondary Palate

It refers to the part of the mouth's roof that separates the nasal and oral cavities in vertebrates, crucial for proper speech and swallowing.

Mesonephros

A transient kidney in vertebrates, functioning in the embryo before the permanent kidneys develop.