Concord Company signed a long-term noncancelable purchase commitment with a majo

Question

Concord Company signed a long-term noncancelable purchase commitment with a major supplier to purchase raw materials in 2018 at a cost of $1,077,300. At December 31, 2017, the raw materials to be purchased have a market value of $1,027,500. In 2018, Concord paid $1,077,300 to obtain the raw materials which were worth $1,027,500. 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

Contratc value = $1,077,300

Market value = $1,027,500

Loss on purchase contract = $ 49,800

Account Title Debit Credit Inventory 1027500 Los onpurchase commitments 49800 Cash 1077300

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