On November 15, 2020, Diamond Company entered into a commitment to purchase 10,000 ounces of gold on February 15, 2021 at a price of P310 per ounce. On December 31, 2020, the market price of gold is P270 per share ounce. On February 15, 2021, the price of gold is P300 per ounce. 1. What is the loss on purchase commitment to be recognized on December 31, 2020? a. 400,000 b. 100,000 c. 300,000 d. 0 2. What is the gain on purchase commitment to be recognized on February 15, 2021? a. 400,000 b. 300,000 c. 100,000 d. 0 3. What amount should be debited to purchases on February 15, 2021? a. 3,000,000 b. 3,100,000 c. 2,700,000 d. 3,500,000
On November 15, 2020, Diamond Company entered into a commitment to purchase 10,000 ounces of gold on February 15, 2021 at a price of P310 per ounce.
On December 31, 2020, the market price of gold is P270 per share ounce. On February 15, 2021, the price of gold is P300 per ounce.
1. What is the loss on purchase commitment to be recognized on December 31, 2020?
a. 400,000
b. 100,000
c. 300,000
d. 0
2. What is the gain on purchase commitment to be recognized on February 15, 2021?
a. 400,000
b. 300,000
c. 100,000
d. 0
3. What amount should be debited to purchases on February 15, 2021?
a. 3,000,000
b. 3,100,000
c. 2,700,000
d. 3,500,000
4. What amount should be recognized as accounts payable on February 15, 2021?
a. 2,700,000
b. 3,100,000
c. 3,500,000
d. 3,000,000
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