西方中级会计学8.ppt

Appendix 9: Purchase Commitments. A purchase commitment is a contract between two parties, requiring one of the parties to purchase a specified amount of inventory at a set price, on or before a particular date. In July 2011, the Lassiter Company. signed two purchase commitments. The first requires Lassiter to purchase inventory for $500,000 by November 15, 2011. The inventory is purchased on November 14, and paid for on December 15. On the date of acquisition, the inventory had a market value of $425,000. The second requires Lassiter to purchase inventory for $600,000 by February 15, 2012. On December 31, 2011, the market value of the inventory items was $540,000. On February 15, 2012, the market value of the inventory items was $510,000. Lassiter uses the perpetual inventory system and is acalendar year-end company. Let’s make the journal entries for these commitments. Part I Let’s look at the single-period purchase commitment first. On the date of acquisition, the inventory items had a market price of $425,000, so Lassiter will debit inventory for $425,000, debit the loss on purchase commitment for $75,000, and credit accounts payable for $500,000. Had the market price of the inventory been $500,000 on the date of acquisition, the company would not experience a loss. The account payable was paid on December 15, 2011, so Lassiter would make the usual entry to debit accounts payable and credit cash for the commitment price of $500,000. Part II For the multi-period purchase commitment, Lassiter did not acquire the inventory until 2012, so at the end of 2011, the company would determine the market price of the inventory items and, in our case, debit estimated loss on purchase commitment and credit estimated liability on purchase commitment for $60,000 ($600,000 commitment price less $540,000 market price). On February 15, 2012, Lassiter purchase the inventory paying cash. The market price of the inventory at the time of acquisition was $510,000. Lassiter will