Multiple Choice$26,000.32$35.000.cesNone.$9.000NexPrevraw On July 10, 2021, Johnson Corporation signed a purchase commitment to purchase inventory for $350,000 on or before February 15, 2022.The company's fiscal year-end is December 31. The contract was exercised on February 1, 2022, and the inventory was purchased for cash atthe contract price. On the purchase date of February 1, the market price of the inventory was $359,000. The market price of the inventory onDecember 31, 2021, was $324,000. The company uses a perpetual inventory system.How much loss on purchase commitment will Johnson recognize in 2021?Multiple Choice$26,000335.000< Prey4 of 15Next >

The purchase commitment seems to be a binding agreement to buy products or services from a provider.…

Answered: $26,000.

Business

Accounting

$26,000.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter7: Inventories: Cost Measurement And Flow Assumptions

Section: Chapter Questions

Problem 5RE: Dani Corporation signed a binding commitment on December 2 to purchase inventory for 300,000 cash on...

See similar textbooks

Similar questions

On September 5, 2021, Howard Corporation signed a purchase commitment to purchase inventory for $130,000 on or before March 31. 2022. The company's fiscal year-end is December 31. The contract was exercised on March 4, 2022, 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, 2021, 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, 2021. 2. Prepare the journal to record the purchase on March 4, 2022. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the necessary adjusting journal entry (if any is required) on December 31, 2021. (If no entry is required for a transaction/event, select No joumal entry reguired" in the first account field.) View transacion list Journal entry worksheet
On October 6, 2021, the Elgin Corporation signed a purchase commitment to purchase inventory for $60,000 on or before March 31, 2022. The company’s fiscal year-end is December 31. The contract was exercised on March 21, 2022, and the inventory was purchased for cash at the contract price. On the purchase date of March 21, the market price of the inventory was $54,000. The market price of the inventory on December 31, 2021, was $56,000. The company uses a perpetual inventory system.Required:1. Prepare the necessary adjusting journal entry (if any is required) on December 31, 2021.2. Prepare the journal entry to record the purchase on March 21, 2022.
On October 6, 2018, the Elgin Corporation signed a purchase commitment to purchase inventory for $60,000on or before March 31, 2019. The company’s fiscal year-end is December 31. The contract was exercised onMarch 21, 2019, and the inventory was purchased for cash at the contract price. On the purchase date of March21, the market price of the inventory was $54,000. The market price of the inventory on December 31, 2018, was$56,000. 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 entry to record the purchase on March 21, 2019
On September 5, 2024, Howard Corporation signed a purchase commitment to purchase inventory for $137, 000 on or before March 31, 2025. The company's fiscal year-end is December 31. The contract was exercised on March 4, 2025, and the inventory was purchased for cash at the contract price. On the purchase date of March 4, 2025, the market price of the inventory was $121, 600. The market price of the inventory on December 31, 2024, was 5126,300. The company uses a perpetual inventory system. Required: Prepare the necessary adjusting journal entry (if any is required) on December 31, 2024. Prepare the journal to record the purchase on March 4, 2025.
Gadubhi
In March 2021, the Phillips Tool Company signed two purchase commitments. The first commitment requires Phillips to purchase inventory for $100,000 by June 15, 2021. The second commitment requires the company to purchase inventory for $150,000 by August 20, 2021. The company’s fiscal year-end is June 30. Phillips uses a periodic inventory system. The first commitment is exercised on June 15, 2021, when the market price of the inventory purchased was $85,000. The second commitment was exercised on August 20, 2021, when the market price of the inventory purchased was $120,000. Required:Prepare the journal entries required on June 15, June 30, and August 20, 2021, to account for the two purchase commitments. Assume that the market price of the inventory related to the outstanding purchase commitment was $140,000 at June 30.
On October 1, 2021, Tyeso Company entered in a noncancellable purchase commitment to purchase inventory at P3,000 per unit. The 2,500 units of inventory will be delivered on February 28, 2022. On December 31,2021, the fair value of each inventory is at P2,850. On date of delivery, each unit of inventory is selling at P2,910. A. How much is the amount of liability on purchase commitment as of December 31, 2021? B. How much is the amount of inventory recorded on February 28, 2022? C. How much is the amount of gain or loss recognized on February 28, 2022?
On October 6, 2016, the Elgin Corporation signed a purchase commitment to purchase inventory for $60,000 on or before March 31, 2017. The company’s fiscal year-end is December 31. The contract was exercised on March 21, 2017, and the inventory was purchased for cash at the contract price. On the purchase date of March 21, the market price of the inventory was $54,000. The market price of the inventory on December 31, 2016, was $56,000. The company uses a perpetual inventory system. Required: 1. Prepare the necessary adjusting journal entry (if any is required) on December 31, 2016. 2. Prepare the journal entry to record the purchase on March 21, 2017.
In March 2018, the Phillips Tool Company signed two purchase commitments. The first commitment requiresPhillips to purchase inventory for $100,000 by June 15, 2018. The second commitment requires the company topurchase inventory for $150,000 by August 20, 2018. The company’s fiscal year-end is June 30. Phillips uses aperiodic inventory system.The first commitment is exercised on June 15, 2018, when the market price of the inventory purchased was$85,000. The second commitment was exercised on August 20, 2018, when the market price of the inventorypurchased was $120,000.Required:Prepare the journal entries required on June 15, June 30, and August 20, 2018, to account for the two purchasecommitments. Assume that the market price of the inventory related to the outstanding purchase commitmentwas $140,000 at June 30.
On July 1, 2018, the Foster Company sold inventory to the Slate Corporation for $300,000. Terms of the salecalled for a down payment of $75,000 and three annual installments of $75,000 due on each July 1, beginning July1, 2019. Each installment also will include interest on the unpaid balance applying an appropriate interest rate. Theinventory cost Foster $120,000. The company uses the perpetual inventory system.Required:1. Prepare the necessary journal entries for 2018 and 2019 assuming revenue recognition upon delivery. Ignoreinterest charges.2. Repeat requirement 1 applying the installment sales method.3. Repeat requirement 1 applying the cost recovery method.
On September 1, 2014, Dockside Tacos signed a purchase commitment to purchase inventory for $400,000 on or before January 31, 2015. The company's fiscal year-end is December 31. The contract was exercised on January 5, 2015 and the inventory was purchased for cash at the contract price. On the purchase date of January 5, the market price of the inventory was $500,000. The market price of the inventory on December 31, 2014, was $300,000. The company uses a perpetual inventory system. The journal entry to record the purchase includes: A. A credit to gain on purchase for 200,000 B. A debit to inventory for 400,000 C. A debit to inventory for 300,000 D. A debit to inventory for 500,000 E. A credit to gain on purchase for 100,000 Please explain
Splish Company signed a long-term noncancelable purchase commitment with a major supplier to purchase raw materials in 2021 at a cost of $905,300. On December 31, 2020, the raw materials to be purchased have a market value of $854,700. In 2021, Splish paid $905,300 to obtain the raw materials which were worth $854,700. Splish uses a periodic inventory system.Prepare the entry to record the purchase.