Accounting for Inventory Transactions with Purchase Commitments

The following data is from Sonic Inc.

Nov. $1,$ Year $1$: Sonic Inc. entered into a purchase contract $($not subject to revision or cancellation$)$ to purchase $52,000$ units of inventory at $$7$ per unit $($an

amount below net realizable value$).$ The contract period extends through February of Year $2.$ Sonic applies a perpetual inventory system and the FIFO

inventory method.

Dec. $31,$ Year $1$: At Sonic's December $31$ year$-$end, the selling price of inventory is at $$6\mathrm{.}75$ per unit.

Jan. $25,$ Year $2$: Sonic purchased the $52,000$ units contracted; the selling price of inventory on this date is $$6\mathrm{.}70$ per unit.

Prepare any necessary journal entries or disclosures on the following dates. Note: The selling prices stated above are net of selling costs.

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$).$

a$.$ November $1,$ Year $1($initiation of contract$).$

b$.$ December $31,$ Year $1($end of reporting period$).$

c$.$ January $25,$ Year $2($purchase date$).$