During the current fiscal year, Blossom Corp. signed a long-term noncancellable purchase commitment with its primary supplier. Blossom agreed to purchase $2.20 million of raw materials during the next fiscal year under this contract. At the end of the current fiscal year, the raw material to be purchased under this contract had a market value of $1.70 million. What is the journal entry at the end of the current fiscal year?

Debit Unrealized Holding Gain or Loss for $500000 and credit Estimated Liability on Purchase Commitment for $500000.

No journal entry is required.

Debit Unrealized Holding Gain or Loss for $1700000 and credit Estimated Liability on Purchase Commitments for $1700000.

Debit Estimated liability on Purchase Commitments for $500000 and credit Unrealized Holding Gain or Loss for $500000.