In 2015, Orear Manufacturing Signed a Contract with a Supplier

Multiple Choice

In 2015, Orear Manufacturing signed a contract with a supplier to purchase raw materials in 2016 for $700,000.Before the December 31, 2015 statement of financial position date, the market price for these materials dropped to $510,000.The journal entry to record this situation at December 31, 2015 will result in a credit that should be reported

A) as a valuation account to Inventory on the statement of financial position.
B) as a current liability.
C) as an appropriation of retained earnings.
D) on the income statement.