At December $31,2025,$ Monty Company has outstanding noncancelable purchase commitments for $37,500$ gallons, at $$3\mathrm{.}72$ per

gallon, of raw material to be used in its manufacturing process. The company prices its raw material inventory at cost or market,

whichever is lower, and uses a perpetual inventory system.

$($b$2)$

Your answer is partially correct.

Assuming that the market price as of December $31,2025,$ is $$3\mathrm{.}35,$ record the journal entry. $($List all debit entries before credit

entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select $"$No

entry" for the account titles and enter $0$ for the amounts.$)$

Date

Account Titles and Explanation

Debit

Credit

Dec. $31$

Loss on Purchase Commitments

Estimated Liability on Purchase Commitments