Answer:
1.June 15, 2021
Dr Purchases $86,500
Dr Loss on purchase commitment $16,500
Cr Cash $103,000
2. June 30, 2021
Dr Estimated loss on purchase commitment $11,800
Cr Estimated liability on purchase commitment $11,800
3. August 20, 2021
Dr Purchases $121,500
Dr Loss on purchase commitment $19,700
Dr Estimated liability on purchase commitment $11,800
Cr Cash $153,000
Explanation:
Preparation of the journal entries required on June 15, June 30, and August 20, 2021, to account for the two purchase commitments
1. June 15, 2021
Dr Purchases $86,500
Dr Loss on purchase commitment $16,500
($103,000-$86,500)
Cr Cash $103,000
2. June 30, 2021
Dr Estimated loss on purchase commitment $11,800
Cr Estimated liability on purchase commitment $11,800
($153,000-$141,200)
3. August 20, 2021
Dr Purchases $121,500
Dr Loss on purchase commitment $19,700
($141,200-$121,500)
Dr Estimated liability on purchase commitment $11,800
($153,000-$141,200)
Cr Cash $153,000
