E 2-10 - Accounting for purchase commitments On Nov. 15, 2020, Malone Corp. entered into a commitment to purchase 200,000 units of raw material X for P40 per unit to be delivered on Mar. 15, 2021. The contract cannot be cancelled. Malone entered into this purchase commitment to protect itself against the volatility in the price of raw material X. purchase price of material X had fallen to P35 per unit. Вy Dec. 31, 2020, thе Required: Using periodic inventory system, prepare the journal entry on: 1. Nov. 15, 2020 2. Dec. 31, 2020 3. Mar. 15, 2021 if the price of the material had fallen further to P32 per unit 4. Mar. 15, 2021 if the price of the material had risen to P42 per unit

E 2-10 - Accounting for purchase commitments On Nov. 15, 2020, Malone Corp. entered into a commitment to purchase 200,000 units of raw material X for P40 per unit to be delivered on Mar. 15, 2021. The contract cannot be cancelled. Malone entered into this purchase commitment to protect itself against the volatility in the price of raw material X. purchase price of material X had fallen to P35 per unit. Вy Dec. 31, 2020, thе Required: Using periodic inventory system, prepare the journal entry on: 1. Nov. 15, 2020 2. Dec. 31, 2020 3. Mar. 15, 2021 if the price of the material had fallen further to P32 per unit 4. Mar. 15, 2021 if the price of the material had risen to P42 per unit

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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Question

E 2-10 - Accounting for purchase commitments
On Nov. 15, 2020, Malone Corp. entered into a commitment tO
purchase 200,000 units of raw material X for P40 per unit to be
delivered on Mar. 15, 2021. The contract cannot be cancelled. Malone
entered into this purchase commitment to protect itself against the
volatility in the price of raw material X.
purchase price of material X had fallen to P35 per unit.
Вy Dec. 31, 2020, the
Required:
Using periodic inventory system, prepare the journal entry on:
1. Nov. 15, 2020
2. Dec. 31, 2020
3. Mar. 15, 2021 if the price of the material had fallen further to P32
per unit
4. Mar. 15, 2021 if the price of the material had risen to P42 per unit

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