Agri Corp has a contract for the purchase of 30,000 bushels of canola at $20 per bushel for delivery in three months that Agri Corp will subsequently resell. Due to a sudden influx in canola in the market, spot prices for canola dropped to $17.50 per bushel at Agri Corp's year end with little likelihood of a quick recovery. The contract may be cancelled at a penalty of $1.50 per bushel. Which one of the following is part of the journal entry that Agri Corp will record at year end?

A. CR Loss on onerous contract 45,000

B. DR Loss on onerous contract 75,000

C. CR Provision for onerous contract 30,000

D. CR Provision for onerous contract 45,000

Answer rating: 100% (QA)

The correct journal entry to record the loss on an onerous contr... View the full answer