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Chicharito Corporation, a manufacturer of Mexican foods, contracted in 2010 to purchase 1,000 pounds of a spice mixture at $5.00 per pound, delivery and payment to be made in Spring of 2012. By 12/31/10, the price per pound of the spice mixture had dropped to $4.60 per pound. By 12/31/11, the price per pound of the spice mixture was $4.75 per pound. In Spring of 2012 (on the day of purchase), the price per pound is $4.80. Chicharito’s entry to record the purchase includes a:
a) debit to Inventory for $5,000
b) credit to Cash for $4,800
c) debit to Liability from Purchase Commitment for $150
d) debit to Inventory for $4,800
 
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The post Chicharito Corporation, a manufacturer of Mexican foods, contracted in 2010 to purchase 1,000 pounds of a spice mixture at $5.00 per pound, delivery and payment to be made in Spring of 2012. By 12/31/10, the price per pound of the spice mixture had dropped to $4.60 per pound. appeared first on Superb Professors.

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