Which Journal Entry Is Required to Record the Existence of a Contingent

Which journal entry is required to record the existence of a contingent loss on a cancelable fixed purchase contract?

A)
$\begin{array}{cc}\text { Accrued Loss on Purchase Commitments } & \mathrm{XXX} \\\text { Loss on Purchase Commitments } & \mathrm{XXX}\end{array}$
B)
Loss on Purchase Commitments $\quad$$\quad$ XXX
Accrued Loss on Purchase Commitments $\quad$ XXX
C)
$\begin{array}{lr}\text { Loss on Purchase Commitments } & \text { XXX } \\\text { Accounts Payable } & \text { XXX }\end{array}$
D) No required entry

Correct Answer:

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