On September 5, 2018, Howard Corporation Signed a Purchase Commitment

question 8

Essay

On September 5, 2018, Howard Corporation signed a purchase commitment to purchase inventory for $130,000 on or before March 31, 2019. The company's fiscal year-end is December 31. The contract was exercised on March 4, 2019, and the inventory was purchased for cash at the contract price. On the purchase date of March 4, the market price of the inventory was $116,000. The market price of the inventory on December 31, 2018, was $120,000. The company uses a perpetual inventory system.
Required:
1. Prepare the necessary adjusting journal entry (if any is required) on December 31, 2018.
2. Prepare the journal to record the purchase on March 4, 2019.

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Definitions:

Coronary Artery

The artery that supplies the heart muscle with oxygen-rich blood, crucial for its functioning.

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Bile Duct

A network of tubes that carry bile from the liver and gallbladder to the intestine, aiding in digestion.

Gallstones

Hardened deposits that can form in the gallbladder, often causing pain and blockage.