During the current fiscal year, jeremiah corp. signed a long-term noncancellable purchase commitment with its primary supplier. jeremiah agreed to purchase $2.0 million of raw materials during the next fiscal year under this contract. at the end of the current fiscal year, the raw material to be purchased under this contract had a market value of $1.6 million. what is the journal entry at the end of the current fiscal year?

a. debit unrealized holding gain or loss for $400,000 and credit estimated liability on purchase commitment for $400,000.

b. debit estimated liability on purchase commitments for $400,000 and credit unrealized holding gain or loss for $400,000.

c. debit unrealized holding gain or loss for $1,600,000 and credit estimated liability on purchase commitments for $1,600,000.

d. no journal entry is required.