During the prior fiscal year, Cullumber Corp. signed a long-term noncancellable purchase commitment with its primary supplier to purchase $2.02 million of raw materials. Cullumber paid the $2.02 million to acquire the raw materials when the raw materials were only worth $1.61 million. Assume that the purchase commitment was properly recorded. What is the journal entry to record the purchase?

Debit Inventory for $1610000, debit Estimated Liability on Purchase Commitments for $410000 and credit Cash for $2020000.

Debit Inventory for $1610000, and credit Cash for $1610000.

Debit Inventory for $1610000, debit Unrealized Holding Gain or Loss for $410000, and credit Cash for $2020000.

Debit Inventory for $2020000, and credit Cash for $2020000.