Answer:
Given that,
Cost of purchasing raw material in 2021 = $902,900
Market value of the raw materials to be purchased at December 31, 2021 = $853,000
Therefore, the journal entry is as follows:
On December 31, 2021
Unrealized holding Gain or loss - income A/c Dr. $49,900
To Estimated liability on purchase commitments $49,900
(To record the Gain or loss - income)
Workings:
Gain or Loss:
= Cost of purchasing raw material in 2021 - Market value of the raw materials to be purchased
= $902,900 - $853,000
= $49,900