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At December 31, 2014, Indigo Girls Company has outstanding noncancelable purchase commitments for 40,150 gallons, at $3.15 per gallon, of raw material to be used

At December 31, 2014, Indigo Girls Company has outstanding noncancelable purchase commitments for 40,150 gallons, at $3.15 per gallon, of raw material to be used in its manufacturing process. The company prices its raw material inventory at cost or market, whichever is lower.

Assuming that the market price as of December 31, 2014, is $2.10, record the journal entry?

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