The following data is from Sonic Inc.

Nov. 1, 2020

Sonic Inc. entered into a purchase contract (not subject to revision or cancellation) to purchase 36,000 units of inventory at $7 per unit (to be used in manufacturing). The contract period extends through February 2021, and Sonic applies a perpetual inventory system and the FIFO inventory method.

Dec. 31, 2020

At Sonics December 31 year-end, inventory was being sold at a price of $5 per unit.

Jan. 25, 2021

Sonic purchased the 36,000 units contracted; however, the selling price per unit of inventory on this date was $4.75.

Prepare any necessary journal entries or disclosures on the following dates.

a. November 1, 2020 (initiation of contract). b. December 31, 2020 (reporting period). c. January 25, 2021 (purchase date).

• Note: The selling prices above are net of selling costs.
• Note: If a line in a journal entry isn't required for the transaction, select "N/A" as the account name and leaver the Dr. and Cr. answers blank (zero)