During the Current Fiscal Year, Jeremiah Corp

Multiple Choice

During the current fiscal year, Jeremiah Corp.signed a long-term noncancellable purchase commitment with its primary supplier.Jeremiah agreed to purchase $2.5 million of raw materials during the next fiscal year under this contract.At the end of the current fiscal year, the raw material to be purchased under this contract had a market value of $2.3 million.What is the journal entry at the end of the current fiscal year?

A) Debit Unrealized Holding Loss for $200,000 and credit Purchase Commitment Liability for $200,000.
B) Debit Purchase Commitment Liability for $200,000 and credit Unrealized Holding Gain for $200,000.
C) Debit Unrealized Holding Loss for $2,300,000 and credit Purchase Commitment Liability for $2,300,000.
D) No journal entry is required.