Exercise 9-12 (Part Level Submission) At December 31, 2017, Martinez Company has

Question

Exercise 9-12 (Part Level Submission)

At December 31, 2017, Martinez Company has outstanding noncancelable purchase commitments for 39,000 gallons, at $3.54 per gallon, of raw material to be used in its manufacturing process. The company prices its raw material inventory at cost or market, whichever is lower.

(b2)

Assuming that the market price as of December 31, 2017, is $3.19, record the journal entry. (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. Round answers to 0 decimal places, e.g. 6,225.)

List of accounts is attached for Journal entry

Exercise 9-12 (Part Level Submission)

Exercise 9-12 (Part Level Submission)

At December 31, 2017, Martinez Company has outstanding noncancelable purchase commitments for 39,000 gallons, at $3.54 per gallon, of raw material to be used in its manufacturing process. The company prices its raw material inventory at cost or market, whichever is lower.

Explanation / Answer

b2 Unrealized Holding Gain or Loss - Income 13650 =39000*(3.54-3.19)        Estimated Liability on Purchase Commitments 13650

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