At December 31, 2014, Indigo Girls Company has outstanding noncancelable purchase commitments for 43,920 gallons, at $4.35 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 $2.90, instead of $5.80, what journal entry should be made?

Dec. 31 Unrealized Holding Gain or Loss - Income 63684

Estimated Liability on Purchase Commitments 63684

Give the entry in January 2015, when the 43,920-gallon shipment is received, assuming that the situation given in (b2) above existed at December 31, 2014, and that the market price in January 2015 was $2.90 per gallon. Prepare the journal entry for when the materials are received in January 2015.

Raw Materials 127368

Estimated Liability on Purchase Commitments 63684

???? 191052

I chose "cash " but it is incorrect. These are the account titles listed.

Accounts Payable Adjustment to Record Inventory at Cost Allowance to Reduce Inventory to Market Allowance to Reduce Inventory to NRV Biological Assets - Shearing Sheep Cash Cost of Goods Sold Estimated Liability on Purchase Commitments Inventory Inventory Over and Short Loss Due to Decline of Inventory to NRV Loss Due to Market Decline of Inventory Notes Payable Purchases Raw Materials Recovery of Loss Due to Market Decline of Inventory Recovery of Loss Inventory Salaries and Wages Expense Sales Revenue Unrealized Holding Gain or Loss - Equity Unrealized Holding Gain or Loss - Income Wool Inventory