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How much loss on purchase commitment will Slam recognize

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Question - On July 10, 2018, Slam Corporation signed a commitment to purchase inventory for $300,000 on or before February 15, 2019. The company's fiscal year-end is December 31. The contract was exercised on February 1, 2019, and the inventory was purchased for cash at the contract price. On the purchase date of February 1, the market price of the inventory was $314,000. The market price of the inventory on December 31, 2018, was $278,000. The company uses a perpetual inventory system.

How much loss on purchase commitment will Slam recognize in 2018?

A. $14,000.

B. $22,000.

C. $36,000.

D. None of the above.

Reference no: EM132494240

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