During the current fiscal year, Carla Vista Corp, signed a long-term non-cancellable purchase commitment with its primary supplier. Carla Vista agreed to purchase $1.90 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 $1.55 million. What is the journal entry at the end of the current fiscal year? O Debit Loss on Purchase Commitments for $1550000 and credit Estimated Liability on Purchase Commitments for $1550000 O Debit Loss on Purchase Commitments for $350000 and credit Estimated Liability on Purchase Commitment for $350000 O No journal entry is required. Debit Estimated Liability on Purchase Commitments for $350000 and credit Loss on Purchase Commitments for $350000

During the current fiscal year, Carla Vista Corp, signed a long-term non-cancellable purchase commitment with its primary supplier. Carla Vista agreed to purchase $1.90 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 $1.55 million. What is the journal entry at the end of the current fiscal year? O Debit Loss on Purchase Commitments for $1550000 and credit Estimated Liability on Purchase Commitments for $1550000 O Debit Loss on Purchase Commitments for $350000 and credit Estimated Liability on Purchase Commitment for $350000 O No journal entry is required. Debit Estimated Liability on Purchase Commitments for $350000 and credit Loss on Purchase Commitments for $350000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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It says they answers are wrong from your example.