Swifty Company signed a long-term noncancelable purchase commitment with a major

Question

Swifty Company signed a long-term noncancelable purchase commitment with a major supplier to purchase raw materials in 2018 at a cost of $1,006,300. At December 31, 2017, the raw materials to be purchased have a market value of $955,300. In 2018, Swifty paid $1,006,300 to obtain the raw materials which were worth $955,300. Prepare the entry to record the purchase. (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.)

Account Titles and Explanation

Debit

Credit

Account Titles and Explanation

Debit

Credit

Explanation / Answer

Account Titles and Explanation Debit Credit Purchases $955,300 Estimated Liability on Purchase Commitments $51,000 Cash $1,006,300

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