Question 3 (1 point) In 2006, Lucas Manufacturing signed a contract with a suppl

Question

Question 3 (1 point) In 2006, Lucas Manufacturing signed a contract with a supplier to purchase raw materials in 2007 for $700,000. Before the December 31, 2006 balance sheet date, the market price for these materials dropped to $510,000. The journal entry to record this situation at December 31, 2006 will result in a credit that should be reported Question 3 options: 1) as a valuation account to Inventory on the balance sheet. 2) as a current liability. 3) as an appropriation of retained earnings. 4) on the income statement.

Explanation / Answer

2) as a current liability. The journal entry to record this situation at December 31, 2006 will result in a credit that should be reported as a current liability

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