On October 6, 2018, the Elgin Corporation signed a purchase commitment to purchase inventory for $60,000 on

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On October 6, 2018, the Elgin Corporation signed a purchase commitment to purchase inventory for $60,000 on or before March 31, 2019. The company's fiscal year-end is December 31. The contract was exercised on March 21, 2019, and the inventory was purchased for cash at the contract price. On the purchase date of March 21, the market price of the inventory was $54,000. The market price of the inventory on December 31, 2018, was $56,000. The company uses a perpetual inventory system.
Required:
1. Prepare the necessary adjusting journal entry (if any is required) on December 31, 2018.
2. Prepare the journal entry to record the purchase on March 21, 2019.
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Intermediate Accounting

ISBN: 9781259722660

9th Edition

Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas

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