At December 31, 2020, Shamrock, Inc., a manufacturer, has outstanding noncancelable purchase commitments for 63,000 pounds of raw material to be used in its manufacturing process. The purchase commitments require Shamrock, Inc. to pay $14 per pound for the raw material. The company prices its raw material inventory at cost or market, whichever is lower. Give the entry in January 2021, when the 63,000-pound shipment is received, assuming that the situation given in (a) aboveexisted at December 31, 2020, and that the market price in January 2021 was $10.00 per pound. Also assume that Shamrock usesa perpetual inventory system.Prepare the journal entry for when the materials are received in January 2021. (Credit account titles are automatically indentedwhen amount is entered. Do not indent manually.)DateAccount Titles and ExplanationDebitCreditJan. 2021

Unrealized Holding Gain or Loss = 63,000 * ($14 - $10) = $252,000

Answered: Give the entry in January 2021, when…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter22: Providing And Obtaining Credit

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At December 31, 2020, Shamrock, Inc., a manufacturer, has outstanding noncancelable purchase commitments for 63,000 pounds of raw material to be used in its manufacturing process. The purchase commitments require Shamrock, Inc. to pay $14 per pound for the raw material. The company prices its raw material inventory at cost or market, whichever is lower.

Give the entry in January 2021, when the 63,000-pound shipment is received, assuming that the situation given in (a) above
existed at December 31, 2020, and that the market price in January 2021 was $10.00 per pound. Also assume that Shamrock uses
a perpetual inventory system.
Prepare the journal entry for when the materials are received in January 2021. (Credit account titles are automatically indented
when amount is entered. Do not indent manually.)
Date
Account Titles and Explanation
Debit
Credit
Jan. 2021

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