Metlock Company signed a long-term noncancelable purchase commitment with a major supplier to purchase raw materials in 2021 at a cost of $902,900. At December 31, 2021, the raw materials to be purchased have a market value of $853,000. Prepare any necessary December 31, 2021 entry.

Respuesta :

Answer:

Entry for december 1, 2021:

Purchase Inventory=$853,000

Liability on purchase commitment=$902,900-$853,000

Liability On purchase commitment=$49000

Cash=$902,900

Explanation:

Entry for december 1, 2021:

Purchase Inventory=$853,000

Liability on purchase commitment=$902,900-$853,000

Liability On purchase commitment=$49000

Cash=$902,900