In November 2021, the Brunswick Company signed two purchase commitments. The first commitment requires Brunswick to purchase 10,000 units of inventory at $10 per unit by December 15, 2021. The second commitment requires the company to purchase 20,000 units of inventory at $11 per unit by March 15, 2022. Brunswick’s fiscal year-end is December 31. The company uses a periodic inventory system. Both contracts were exercised on their expiration date.
Required:
1. Prepare the journal entry to record the December 15 purchase for cash assuming the following alternative unit market prices on that date:
a. $10.50
b. $ 9.50
2. Prepare any necessary adjusting entry at December 31, 2021, for the second purchase commitment assuming the following alternative unit market prices on that date:
a. $12.50
b. $10.30
3. Assuming that the unit market price on December 31, 2021, was $10.30, prepare the journal entry to record the purchase on March 15, 2022, assuming the following alternative unit market prices on that date:
a. $11.50
b. $10.00
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