able During the current fiscal year, Jeremiah Corp.signed a long-term noncancell purchase commitment with its primary supplier. Jeremiah agreed to purchase $2.0 million of raw materials during the next fiscal year under this contract. At he end of the current fiscal year, the ravvmaterial to be purchased sand" his contract ha market value of $1.6 million. What is the journal entry at the end of the curent fiscal Circle the letter of the teest answe Liability on Purchase Commitment for $400,000 b. Debit Estimated liability on Purchase Commitments for 5400,000 and credi Unrealized Holding Gain or Loss for $400,000 . Debit Unrealized Holding Gain or Loss for $1,600,000 and credit Estimated Liability on Purchase Comm d. No journal entry is required Corporation, a manufacturer of ethnic foods, contracted in 2017 to purchane 600 a spice mixture at $3.00 per pound, delivery to be made in spring of 2018 56. RS the price per mixture had risen to $3.25 per pound. In 2017, RS should recognize Ans. a. a loss of $1,800. b. a loss of $150. no gain or loss. d. a gain of S150 57. LF Corporation, a manufacturer of Mexican foods, contracted in 2017 to purchase 2,000 pounds of a spice mixture at S5.00 per pound, delivery to be made in spring of 2018. By 1231/17, the price per pound of the spice mixture had dropped to S4.70 per pound. In 2017. LF should recognize Ans. a a loss of $10,000. b. a loss of $600. c. no gain or loss. d. a gain of S600. 58. Gamma Ray Corp. has annual sales totaling $1,170,000 and an average gross profit of 20% ofcost. What is the dollar amount of the gross profit? Ans. a. $234,000 b. $175,500. $195,000. c. d. $292,500 All of the following are defined as elements of an income statement except 59 Ans. a.Expenses. b. Shareholders' equity Gains and losses. Revenues c. d. 60. Which of the following is a true statement about the objective of general-purpose Ans. a. Financial reporting is ordinarily focused on industries rather than individual entities financial reporting? b. The objective applies only to information that is useful for investment professionals. c. Financial reporting directly measures management performance. d. The information provided relates to the entity's economic resources and claims Page 12 of 12