Exercise 8 6 At December 31, 2020, Sarasota Ltd has outstanding non cancellable purchase commitments for 37,200 litres of raw material at $2 00 per litre The material will be used in Sarasotas manufacturing process, and the company prices its raw materials inventory at cost or NRV, whichever is lower Assuming that the market price as at December 31, 2020, is $1 70 per litre instead of $2 00, how would you treat this commitment in the accounts and statements (Credit account titles are automatically indented when the amount is entered Do not indent manually If no entry is required, select No Entry for the account titles and enter 0 for the amounts ) Date Account Titles and Explanation Debit Credit December 31, 2020 SHOW LIST OF ACCOUNTS Prepare the entry for January 15, 2021, when the entire shipment is received, assuming that the situation in above part existed at December 31, 2020, and that the market price in January 2021 is $1 70 per litre (Credit account titles are automatically indented when the amount is entered Do not indent manually If no entry is required, select No Entry for the account titles and enter 0 for the amounts ) Date Account Titles and Explanation Debit Credit January 15, 2021 SHOW LIST OF ACCOUNTS Question Attempts 0 of 4 used SAVE FOR LATER SUBMIT ANSWER

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Exercise 8-6 At December 31, 2020, Sarasota Ltd. has outstanding non-cancellable purchase commitments for 37,200 litres of raw material at $2.00 per litre. The material

Exercise 8-6

At December 31, 2020, Sarasota Ltd. has outstanding non-cancellable purchase commitments for 37,200 litres of raw material at $2.00 per litre. The material will be used in Sarasotas manufacturing process, and the company prices its raw materials inventory at cost or NRV, whichever is lower.

Assuming that the market price as at December 31, 2020, is $1.70 per litre instead of $2.00, how would you treat this commitment in the accounts and statements? (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
December 31, 2020

SHOW LIST OF ACCOUNTS

Prepare the entry for January 15, 2021, when the entire shipment is received, assuming that the situation in above part existed at December 31, 2020, and that the market price in January 2021 is $1.70 per litre. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)