Question

At December 31, 2020, Wildhorse Company has outstanding noncancelable purchase commitments for 36,100 gallons, at $4.14 per gallon, of raw material to be used in its manufacturing process. The company prices its raw material inventory at cost or market, whichever is lower.

A.) Assuming that the market price as of December 31, 2020, is $2.70, record the journal entry.

Answer 1

The answer and procedures of the exercise are attached in the following archives.

Explanation

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.