On Oct. 1, 2011, the Delaware Corp., which maintains a periodic inventory, signe

Question

On Oct. 1, 2011, the Delaware Corp., which maintains a periodic inventory, signed a firm purchase commitment to acquire 50,000 units of merchandise inventory from one of its suppliers for $8 per unit when these units were selling for $8.00 per unit. This contract must be fulfilled by Dec. 31, 2012. During 2011, Delaware acquired 20,000 of these units from the supplier. On Dec. 31, 2011, the cost of the inventory items that Delaware has agreed to buy dropped to $7.50 per unit. On May 26, 2012, Delaware acquired 15,000 units of these inventory items on account from its supplier when the current cost of these inventory items was $7.80 per unit. Required: Make the necessary entries for Delaware related to this purchase commitment on:
(a) Oct. 1, 2011;
(b) Dec. 31, 2011; and
(c) May 26, 2012.

Explanation / Answer

Dec. 31, 2011;

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