During the Prior Fiscal Year, Jeremiah Corp

Multiple Choice

During the prior fiscal year, Jeremiah Corp.signed a long-term noncancellable purchase commitment with its primary supplier to purchase $2.5 million of raw materials.Jeremiah paid the $2.5 million to acquire the raw materials when the raw materials were only worth $2.2 million.Assume that the purchase commitment was properly recorded.What is the journal entry to record the purchase?

A) Debit Inventory for $2,200,000, and credit Cash for $2,200,000.
B) Debit Inventory for $2,200,000, debit Unrealized Holding Loss for $300,000, and credit Cash for $2,500,000.
C) Debit Inventory for $2,200,000, debit Purchase Commitment Liability for $300,000 and credit Cash for $2,500,000.
D) Debit Inventory for $2,500,000, and credit Cash for $2,500,000.