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(Purchase Commitments) Prater Company has been having difficulty obtaining key raw materials for its manufacturing process.
(Purchase Commitments)Prater Company has been having difficulty obtaining key raw materials for its manufacturing process. The company therefore signed a long-term noncancelable purchase commitment with its largest supplier of this raw material on November 30, 2011, at an agreed price of $400,000. Under the long-term purchase commitment, all supplies are planned after December 31, 2011. At December 31, 2011, the raw material had declined in price to $375,000. What entry would you make on December 31, 2011, to recognize these facts? Description/Account Debit Credit
