Exercise 9-9 Marvin Gaye Company has been having difficulty obtaining key raw ma

Question

Exercise 9-9 Marvin Gaye Company has been having difficulty obtaining key raw materials for its manufacturing process. The company therefore signed a long-term noncancelable purchase commitment with its largest supplier of this raw material on November 30, 2014, at an agreed price of $520,400. At December 31, 2014, the raw material had declined in price to $492,700. What entry would you make on December 31, 2014, to recognize these facts? (Credit account titles are automatically indented when amount is entered1 Do not indent manually.) Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

Trading and profit & loss A/c - dr. 27,700

To Decrease in value of raw materials 27,700

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