(L03) (Purchase Commitments) Marvin Gaye Company has been having difficulty obtaining key raw materials for its manufacturing process. The company therefore signed a long-term noncancelable purchase commitment with its largest supplier of this raw material on November 30, 2017, at an agreed price of $400,000. At December 31, 2017, the raw material had declined in price to $365,000.

Instructions What entry would you make on December 31, 2017, to recognize these facts?