During 2010, Larue Co., a manufacturer of chocolate candies, contracted to purchase 100,000 pounds of cocoa beans at $4.00 per pound, delivery to be made in the spring of 2011.Because a record harvest is predicted for 2011, the price per pound for cocoa beans had fallen to $3.10 by December 31, 2010.
Of the following journal entries, the one which would properly reflect in 2010 the effect of the commitment of Larue Co.to purchase the 100,000 pounds of cocoa is

Question

Quizplus · Accepted Answer

The Answer of During 2010, Larue Co., a manufacturer of chocolate candies, contracted to purchase 100,000 pounds of cocoa beans at $4.00 per pound, delivery to be made in the spring of 2011.Because a record harvest is predicted for 2011, the price per pound for cocoa beans had fallen to $3.10 by December 31, 2010.
Of the following journal entries, the one which would properly reflect in 2010 the effect of the commitment of Larue Co.to purchase the 100,000 pounds of cocoa is