Accounting for Inventory Transactions with Purchase Commitments On December 1 of Year 1, Aude Corp. entered into a purchase commitment (not subject to revision or cancellation) to purchase 10,000 items of inventory at $20 per unit before January 31 of Year 2. The market price of inventory on December 1 of Year 1 is $20. The company applies a perpetual inventory system and the LIFO inventory method. Required a. On December 5 of Year 1, 1,000 items of inventory are purchased for cash when the market price is $21 per item. Record the purchase entry. Date Dec. 5, Year 1 Inventory Cash To record purchase Account Name Dr. 21000 Cr. 21000 b. Assume instead that the market price is $19 on December 5 of Year 1 when 1,000 items of inventory are purchased for cash. Record the purchase entry. Date Account Name Dec. 5. Year 1 Inventory Holding Loss on Inventory Cash To record purchase Dr. Cr. 19000 2000 21000 c. On December 31 of Year 1, the market price of inventory is $19. Record the entry, if any, that is necessary at year-end. Note: If a journal entry isn't required on any of the dates shown, select "N/A-debit" and "N/A-credit" as the account names and leave the Dr, and Cr. answers blank (zero). Date Dec. 31, Year 1 Account Name Dr. Cr. To record estimated loss on the commitment d. The 9,000 remaining units of inventory per contract were purchased for cash on January 15 of Year 2, when the market price was $18.50. Record the purchase entry. Date Jan. 15 Year 2 Account Name Dr. Cr