At December 31, 2020, Tamarisk, Inc., a manufacturer, has outstanding noncancelable purchase commitments for 85,500 pounds of raw material to be used in its manufacturing process. The purchase commitments require Tamarisk, Inc. to pay $18 per pound for the raw material. The company prices its raw material inventory at cost or market, whichever is lower.

(a2)

	Your answer is correct.

Assuming that the market price as of December 31, 2020, is $11.50, record the journal entry. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31	unrealized holding gain or loss -inventory	555750	enter a credit amount
	estimated liability	enter a debit amount	555750

B) Give the entry in January 2021, when the 85,500-pound shipment is received, assuming that the situation given in (a) above existed at December 31, 2020, and that the market price in January 2021 was $11.50 per pound. Also assume that Tamarisk uses a perpetual inventory system. Prepare the journal entry for when the materials are received in January 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 2021	enter an account title for the journal entry in January 2018	enter a debit amount	enter a credit amount
	enter an account title for the journal entry in January 2018	enter a debit amount	enter a credit amount
	enter an account title for the journal entry in January 2018	enter a debit amount	enter a credit amount