A furniture company enters into a non-cancellable purchase contract with a supplier on 1 November 20X5. The
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A furniture company enters into a non-cancellable purchase contract with a supplier on 1 November 20X5. The contract requires the company purchase 480,000 meters of fabric at $0.60 per meter in 20X6. At the end of 20X5, the replacement cost for fabric is $0.45 per meter. The company is required to fulfil the contract, and cannot cancel.
Prepare the journal entry to record the onerous contract.
Related Book For
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker
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