Prater Company has had difficulty obtaining key raw materials for its manufacturing

Prater Company has had 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, 2022, at an agreed price of $400,000. At December 31, 2022, the raw material had declined in price to $375,000.


Instructions

What entry would you make on December 31, 2022, to recognize these facts?