Question

Oriole Company signed a long-term noncancelable purchase commitment with a major supplier to purchase raw materials in 2018 at a cost of $919,600. At December 31, 2018, the raw materials to be purchased have a market value of $869,100. Prepare any necessary December 31, 2018 entry. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation


Debit


Credit


Dec. 31

Answer 1

Dec 31 2018

Debit. Stock $919,600

Credit. Supplier $919,600

Narration. Records of stock purchase under non cancelable agreement with supplier.

Dec 31 2018

Debit profit or loss 50,500

Credit. Stock. 50,500

Loss on carrying value of stock compare to realisable value.