$2$:

Zebra Corp is a publicly traded corporation and signs a purchase contract with Elk Corporation. Under the terms of the contract, Zebra agrees to take delivery of the inventory and pay a price of

$$550,000$ to Elk Company. By September $30,2023,$ Zebra's year end, the fair value of the goods decreases by $10\%.$ Zebra does NOT expect to recover this additional cost and the value of the inventory does NOT recover prior to Zebra taking delivery of the goods on October $31,2023.$

Instructions

a$,$Record the journal entry, if one is necessary on the contract signing date.

b$.$Record the journal entry, if one is necessary for Zebra's year end.

c$,$Record the journal entry for the receipt of the inventory.

d$,$CRITICAL THINKING: The CEO has reviewed the entry$($ies$)$ that were made related to this contract and the subsequent transactions. Provide him with an explanation of what type of contract this is and why it has been accounted for in this manner.