Question: 1 1 . Johnson Corp. signed a long - term non - cancellable purchase commitment with its primary supplier. Johnson agreed to purchase $ 3

11. Johnson Corp. signed a long-term non-cancellable purchase commitment with its primary supplier. Johnson agreed to purchase $3.5 million of raw materials during the next fiscal year under this contract. At the end of the current fiscal year, the raw material to be purchased under this contract had a market value of $2.9 million.
a. What journal entry is required at the end of the current fiscal year?
b. What is the journal entry to record the purchase/payment of the commitment?

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