Question
A company signs a contract for $790,000 for light bulbs to be produced later in the year. Before the light bulb production has started, the
A company signs a contract for $790,000 for light bulbs to be produced later in the year. Before the light bulb production has started, the market value of the contract falls to $650,000. What journal entry should be recorded for the payment after the contract completion? (Ch9)
19
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| Dr. Inventory $650,000; Dr. Loss on settlement of contract $140,000; Cr. Cash $790,000 |
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| Dr. Inventory $790,000; Cr. Cash $790,000 |
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| Dr. Inventory $650,000; Cr. Cash $650,000 |
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| Dr. Inventory $650,000; Dr. Estimated liability on purchase commitments $140,000; Cr. Cash $790,000 |
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
