A company enters into long position in three futures contracts in wheat for 650 cents per bushel. Each contract is based on 5,000 bushels and quoted in cents per bushel. The initial margin is $5,000 and the maintenance margin is $3,000 per contract. The company will be allowed to withdraw any balance in the margin account in excess of the initial margin and the company will get a margin call if the balance is going below the maintenance margin. Please fill in the following blanks. a. There is a margin call if the futures price goes down by(sample answer: 20 cents) to the price of per bushel (sample answer: 800 cents)? b. $1,500 will be withdrawn from the margin account if the price goes up by(sample answer: 20 cents) to the price of per bushel (sample answer: 800 cents

A company enters into long position in three futures contracts in wheat for 650 cents per bushel. Each contract is based on 5,000 bushels and quoted in cents per bushel. The initial margin is $5,000 and the maintenance margin is $3,000 per contract. The company will be allowed to withdraw any balance in the margin account in excess of the initial margin and the company will get a margin call if the balance is going below the maintenance margin. Please fill in the following blanks. a. There is a margin call if the futures price goes down by(sample answer: 20 cents) to the price of per bushel (sample answer: 800 cents)? b. $1,500 will be withdrawn from the margin account if the price goes up by(sample answer: 20 cents) to the price of per bushel (sample answer: 800 cents

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 2RE: Yankee Corp. agrees to provide Albany Company 24 months of coaching services. The contract sets the...

See similar textbooks

Similar questions

ABC Co. expects the value of yens to decrease in the next 30 days. Accordingly, on December 15, 20x1, ABC Co. enters into a 30-day forward contract to sell 4,000,000 yens at the forward rate of PO.47. On December 31, 20x1, the forward rate was PO.485 and by January 15, 20×2, the spot rate moved to PO.46. 10) The entry to record the forward contract on December 15, 20x1 includes a. a debit to forward contract for P60,000 b. a credit to forward contract for P60,000 C. a debit to loss on forward contract for P60,000 d. none 11) How much is the gain (loss) on change in fair value of the derivative on December 31, 20x1? a. 60,000 in profit or loss b. (60,0000) in OCI C. (40,000) in OCI d. (60,000) in profit or loss 12) The derivative asset (liability) to be included in the December 31, 20x1 statement of financial position is a. 1,960,000 b. (1,920,000) c. 60,0000 d. (60,000) 13) How much is the gain (loss) on change in fair value of the derivative on January 15, 20x2? a. 120,000 b.…
ABC Co. expects the value of yens to decrease in the next 30 days. Accordingly, on December 15, 20x1, ABC Co. enters into a 30-day forward contract to sell 4,000,000 yens at the forward rate of PO.47, On December 31, 20x1, the forward rate was PO,485 and by January 15, 20x2, the spot rate moved to PO.46. 10) The entry to record the forward contract on December 15, 20x1 includes a. a debit to forward contract for P60,000 b. a credit to forward contract for P60,000 c. a debit to loss on forward contract for P60,000 d. none 11) How much is the gain (loss) on change in fair value of the derivative on December 31, 20x1? a. 60,000 in profit or loss b. (60,0000) in OCI C. (40,000) in OCI d. (60,000) in profit or loss 12) The derivative asset (liability) to be included in the December 31, 20x1 statement of financial position is a. 1,960,000 b. (1,920,000) c. 60,0000 d. (60,000)
A marketing manager leases a car for 24 months after agreeing to a negotiated price of $44,250 and makes a down payment that is 20% of the negotiated price. Find the monthly lease payment (in dollars) if the money factor is 0.0026. Assume that the residual value is 52% of the MSRP of $48,900 and there is no trade-in. Round you answer to te nearest cent. $?
A grocery store chain and a farmer enter a forward contract for 10,000 bushels of wheat. The contract expires 3 months from today, and the store chain agrees to pay $7.50 per bushel. If the wheat price increases to $8.15 per bushel by contract expiration, calculate profit/loss for each party.
suppose that Mr. Binda buys a three-month 5,000 contracts to buy 'commodity-X at a futures price of $1,000 from Mr. John. The contract requires an initial margin of $70 per contract and maintenance margin of $40 per contract. Required: a) Compute the initial margin that both Mr. Binda must deposit to the clearinghouse. b) Compute the maintenance margin that both Mr. Binda must deposit to the clearinghouse.suppose that Mr. Binda buys a three-month 5,000 contracts to buy 'commodity-X at a futures price of $1,000 from Mr. John. The contract requires an initial margin of $70 per contract and maintenance margin of $40 per contract.Required:a) Compute the initial margin that both Mr. Binda must deposit to the clearinghouse.b) Compute the maintenance margin that both Mr. Binda must deposit to the clearinghouse.
A marketing manager leases a car for 24 months after agreeing to a negotiated price of $44,250 and makes a down payment that is 20% of the negotiated price. Find the monthly lease payment ( dollars) if the money factor is 0.0022. Assume that the residual value is 54% of the HSRP of $48.900 and there is no trade-in. (Round your answer to the nearest cent.) $ Need Help?
Nvidia enters into a contract which pays $2,100/month for six months of services. In addition, there is a 70% chance the contract will pay an additional $3,500 and a 30% chance the contract will pay an additional $1,500, depending on the outcome of the contract. Assume Nvidia estimates variable consideration as the most likely amount. What is the amount of revenue Nvidia would recognize for the first month of the contract? Note: Do not round intermediate calculations. Round final answer to whole dollars. Multiple Choice $2,100 $2,450 ☐ $2,683
You are short 15 gasoline futures contracts, established at an initial settle price of $2.085 per gallon, where each contract represents 42,000 gallons. Your initial margin to establish the position is $7,425 per contract and the maintenance margin is $6,500 per contract. Over the subsequent four trading days, gasoline settles at $2.071, $2.099, $2.118, and $2.146, respectively. Compute the balance in your margin account at the end of each of the four trading days and compute your total profit of loss at the end of the trading period. Assume that a margin call requires you to fund your account back to the initial margin requirement.
At the end of one day a clearing house member is long 50 contracts, and the settlement price is $10,000 per contract. The original margin is $500 per contract. On the following day the member becomes responsible for clearing an additional 10 long contracts, entered into at a price of $9,800 per contract. The settlement price at the end of this day is still $9,800. How much does the member have to add to its margin account with the exchange clearing house? $0 $5,000 $10,000 $15,000
SorCo. Inc. has just entered into a sale agreement with a customer. The contract is for $600,000. However, the payments will be made as follows: 1 August 20X1 on date of delivery $400,000; 1 August 20X2 $100,000 and 1 August 20X3 $100,000. SorCo has estimated that the interest rate required for this customer is 8%. SorCo follows IFRS. Required: Prepare the journal entry required to record the sale on 1 August 20X1 and the receipt of cash on 1 August 20X2 and 20X3. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations and round your final answers to the nearest whole dollar.)
Live Forever Life Insurance Company is selling a perpetuity contract that pays $1,500 monthly. The contract currently sells for $260,000. a. What is the monthly return on this investment vehicle? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the APR? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the effective annual return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Monthly return b. APR c. EAR
A Firm buys an FRA on 90-day LIBOR expiring in 30 days with Notional principal of $20 million. The contract rate is 10%. If at expiration, LIBOR is 8%, how much will the long has to pay to the short i.e., seller of FRA. What happens if at expiration, LIBOR is 12%?