(Answered) A contract for a purchase commitment specifies a price of

Accounting

A contract for a purchase commitment specifies a price of $10 per unit for a commodity. The price is fixed by contract. As of the balance sheet date, the contract had not been executed, and the market price of the commodity had decreased to $7. The firm made the appropriate adjusting entry at year-end. At time of payment in the next period, the market price of the commodity had increased to $11. The firm should report a gain of $3 per unit in the balance sheet.

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