Business, 19.12.2019 05:31 mia3128

On october 6, 2018, the elgin corporation signed a purchase commitment to purchase inventory for $81,000 on or before march 31, 2019. the company's fiscal year-end is december 31. the contract was exercised on march 21, 2019, and the inventory was purchased for cash at the contract price. on the purchase date of march 21, the market price of the inventory was $61,000. the market price of the inventory on december 31, 2018, was $70,000. the company uses a perpetual inventory system.

1. prepare the necessary adjusting journal entry (if any is required) on december 31, 2018

2. prepare the journal entry to record the purchase on march 21, 2019

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Answer from: talanna394

The Journal entry are as follows:

(i) On December 31, 2018

Estimated loss on purchase commitment A/c Dr. $11,000

To Estimated liability on purchase commitment $11,000

(Being record the loss on purchase commitment )

Loss on purchase commitment:

= Signed value of inventory - market price of the inventory

= $81,000 - $70,000

= $11,000

(ii) On March 21, 2019

Inventory A/c Dr. $61,000

Loss on purchase commitment A/c Dr. $9,000

Estimated liability on purchase commitment A/c Dr. $11,000

To cash $81,000

(Being record the purchase)

Loss on purchase commitment:

= Market price of inventory Dec. 31,2018 - Market price of inventory on march 21,2019

= $70,000 - $61,000

= $9,000

Answer from: Quest

It is answer choice (a.) true.

Answer from: Quest

of the three mortgage options that demarco and tanya have to choose from, the balloon payment mortgage would be their best option, over adjustable payment and fixed payment plans.ultimately, the balloon payment plan would save demarco and tanya overall, in interest, would cost less monthly, and they would only have to make these payments for 8 years, opposing to 30 years for adjustable or fixed payment plans.

overall, demarco and tanya would save $80,811 if they chose balloon payments over fixed payments, and would save $116,711 if they choose balloon payments over adjustable payments. benefits with choosing fixed payments over adjustable payments is that, in the end, the payments will still be $836.30 a month, while with adjustable payments, the initial monthly payments will be $763.38 to $1082.70 a month, ultimately leading to a more costly purchase. benefits with choosing fixed payments over balloon payments are not present. benefits in choosing adjustable payments over is that it has a lower interest rate, and starts with lower monthly payments initially. benefits in choosing adjustable payments over balloon payments include a lower interest rate, and lower initial monthly payments. benefits in choosing balloon payments over fixed payments include lower interest rates, lower overall price, lower monthly payments, takes less time to pay off, and does not require a downpayment. benefits in choosing balloon payments over adjustable payments include, lower monthly payments (when averaged), takes less time to pay off, and lower overall price.

hence, option c, balloon payments, is the best option for demarco and tanya to make this purchase, for it will save them a minimum of $80811, and a maximum of $116,711.

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On october 6, 2018, the elgin corporation signed a purchase commitment to purchase inventory for $81...

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