A company takes a short position in 10 futures contracts on soybean on October 2, 2020. The initial futures price is $10.175 per bushel. Suppose on December 31, 2020 the futures price is $10.02 per bushel. On March 20, 2021 it is $9.89 per bushel. The contracts are closed out on March 20, 2021. What gain is recognized (taxable) in the accounting year January 1 to December 31, 2021 if the company is classified as a hedger? Each contract is on 5,000 bushels of soybean.
| A. |
$7,750 |
|
| B. |
$6,500 |
|
| C. |
$14,250 |
|
| D. |
$50,875 |
A company takes a long position in 5 futures contracts on soybean on October 2, 2020. The initial futures price is $10.19 per bushel. Suppose on December 31, 2020 the futures price is $10.25 per bushel. On March 20, 2021 it is $10.42 per bushel. The contracts are closed out on March 20, 2021. What gain is recognized (taxable) in the accounting year January 1 to December 31, 2021 if the company is classified as a speculator? Each contract is on 5,000 bushels of soybean.
| A. |
$5,750 |
|
| B. |
$4,250 |
|
| C. |
$1,500 |
|
| D. |
$50,950 |
Luby’s Inc. has derivatives transactions with four different counterparties A, B, C, D which are worth $8 million, -$17 million, $20 million and -$32 million, respectively to Lucy’s. The transactions are cleared centrally through the same CCP and the CCP requires a total initial margin of $10 million. How much margin or collateral does Luby’s have to provide?
| A. |
49 million |
|
| B. |
21 million |
|
| C. |
31 million |
|
| D. |
38 million |
Suppose a trader who owns 320,000 pounds of commodity A decides to hedge the value of her position with the futures contracts. One futures contract is for the delivery of 40,000 pounds of commodity B. The price of commodity A is $21.20 and the futures price is 18.30 (both dollars per pound). The correlation between the futures price and the price of commodity A is 0.92. The volatilities of commodity A and the futures are 0.31 and 0.38 per year, respectively. What is the minimum variance hedge ratio?
| A. |
0.82 |
|
| B. |
1.23 |
|
| C. |
1.13 |
|
| D. |
0.75 |
Suppose a trader who owns 320,000 pounds of commodity A decides to hedge the value of her position with the futures contracts. One futures contract is for the delivery of 40,000 pounds of commodity B. The price of commodity A is $21.20 and the futures price is 18.30 (both dollars per pound). The correlation between the futures price and the price of commodity A is 0.92. The volatilities of commodity A and the futures are 0.31 and 0.38 per year, respectively. Should the trader take a long or short futures position?
| A. |
Long |
|
| B. |
Short |
In: Finance
Described below are certain transactions of the Bell Company for 2020. Bell uses a perpetual inventory system.
A. June 10, the company purchased the rights to natural resources on land owned by Jay Company for $60,000. Bell’s geology team believes they can successfully remove 600,000 pounds of ore from the mine.
F. October 31, the company borrowed $230,000 by issuing an interesting bearing 9%, ninety day,
note to the First State Bank to finance the mining operations.
G. On December 15, received utility bills totaling $5,245.00 related to mine operations that are due January15.
H. From November 1 until year end Bell removed 7,000 pounds of ore from the mine. They have a contract to sell and deliver 6000 pounds of the ore in January to an ore purifying firm for $145 per pound.
INSTRUCTIONS
(i) Prepare the journal entries necessary to record the transactions above using appropriate dates.
(ii) Prepare the adjusting entries necessary at December 31, in order to properly record adjusting journal entries.
Where necessary round to the nearest whole dollar.
In: Accounting
During 2020, Grouper Company started a construction job with a
contract price of $1,610,000. The job was completed in 2022. The
following information is available.
|
2020 |
2021 |
2022 |
||||
|---|---|---|---|---|---|---|
|
Costs incurred to date |
$434,300 | $859,560 | $1,073,000 | |||
|
Estimated costs to complete |
575,700 | 242,440 | –0– | |||
|
Billings to date |
301,000 | 897,000 | 1,610,000 | |||
|
Collections to date |
271,000 | 817,000 | 1,428,000 |
Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used.
Prepare all necessary journal entries for 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. For costs incurred use account Materials, Cash, Payables.)
Compute the amount of gross profit to be recognized each year,
assuming the completed-contract method is used.
In: Accounting
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In: Accounting
Crane Incorporated leases a piece of machinery to Blue Company on January 1, 2020, under the following terms.
| 1. | The lease is to be for 4 years with rental payments of $13,325 to be made at the beginning of each year. | |
| 2. | The machinery’ has a fair value of $70,328, a book value of $52,480, and an economic life of 10 years. | |
| 3. | At the end of the lease term, both parties expect the machinery to have a residual value of $26,240. To protect against a large loss, Crane requests Blue to guarantee $18,430 of the residual value, which Irving agrees to do. | |
| 4. | The lease does not transfer ownership at the end of the lease term, does not have any bargain purchase options, and the asset is not of a specialized nature. | |
| 5. | The implicit rate is 5%, which is known by Blue. | |
| 6. | Collectibility of the payments is probable. |
Click here to view factor tables.
Evaluate the criteria for classification of the lease, and
describe the nature of the lease.
For the lessee, it is a , and for the lessors, it is a
Prepare the journal entries for Blue for the year 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|
Jan. 1 |
|||
|
(To record lease) |
|||
|
Jan. 1 |
|||
|
(To records first lease payment) |
|||
|
Dec. 31 |
|||
|
(To record accrued interest) |
|||
|
Dec. 31 |
|||
|
(To record amortization expense) |
Prepare the journal entries for Crane for the year 2020
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|
Jan. 1 |
|||
|
(To record lease) |
|||
|
Jan. 1 |
|||
|
(To record first lease payment) |
|||
|
Dec. 31 |
|||
|
(To record lease revenue) |
Evaluate the criteria for classification of the lease, and
describe the nature of the lease, assuming that Blue did not
guarantee any amount of the expected residual value.
For the lessee, it is a and for the lessor, it is a
Suppose Blue did not guarantee any amount of the expected residual value. Prepare the journal entries for Blue for the year 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|
Jan. 1 |
|||
|
(To record lease) |
|||
|
Jan. 1 |
|||
|
(To record first lease payment) |
|||
|
Dec. 31 |
|||
|
(To record interest and amortization) |
Suppose Blue did not guarantee any amount of the expected residual value. Prepare the journal entries for Crane for the year 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 5,275.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|
Jan. 1 |
|||
|
(To record lease payments) |
|||
|
Dec. 31 |
|||
|
(To record lease revenue) |
|||
|
Dec. 31 |
|||
|
(To record depreciation) |
In: Accounting
Runiowa is a fashion shoe company that tries to manufacture much more durable heels in 2020. The management team of Runiowa suggests two rubber materials A and B and the research team of Runiowa is asked to design an experiment to gauge whether the rubber A is more durable than the rubber B. 300 people in the US aged between 18 and 65 were randomly chosen. The rubber A is allocated at random to the right shoe or the left shoe of each individual. Then, the rubber B has been assigned to the other. For example, if Mr. Nathaniel is one of 300 people randomly chosen, then the right heel of Mr. Nathaniel is randomly assigned to be made with the rubber A and then his left heel is to be made with the rubber B. The research team measures the amounts of heel wear both the rubber A (wA) and the rubber B (wB) in each individual and records the difference wA − wB of 300 individuals. Even though the individuals are heterogeneous with different heights and weights, those individual heterogeneities will not obscure the comparison of treatment groups by focusing on the paired differences of each individual. Also as long as the heel materials are randomly assigned for each individual, there has been no restrictions on shoe styles. Note that the age of subjects is ranging from 18 to 65. In this way, researchers compare treatments within blocks controlling heterogeneity of individuals. The research team also repeats this experiment design with 300 people in the US aged between 18 and 65 chosen at random.
Question:
Is there a conjecture?
What is the response variable?
What is the explanatory variable?
What levels of the factor(s) were used in the expereiment?
What are the treatments for this experiment?
What are the experimental units?
What is the control?
Hoe much replication was used?
How was randomization used?
In: Statistics and Probability
Runiowa is a fashion shoe company that tries to manufacture much more durable heels in 2020. The management team of Runiowa suggests two rubber materials A and B and the research team of Runiowa is asked to design an experiment to gauge whether the rubber A is more durable than the rubber B. 300 people in the US aged between 18 and 65 were randomly chosen. The rubber A is allocated at random to the right shoe or the left shoe of each individual. Then, the rubber B has been assigned to the other. For example, if Mr. Nathaniel is one of 300 people randomly chosen, then the right heel of Mr. Nathaniel is randomly assigned to be made with the rubber A and then his left heel is to be made with the rubber B. The research team measures the amounts of heel wear both the rubber A (wA) and the rubber B (wB) in each individual and records the difference wA − wB of 300 individuals. Even though the individuals are heterogeneous with different heights and weights, those individual heterogeneities will not obscure the comparison of treatment groups by focusing on the paired differences of each individual. Also as long as the heel materials are randomly assigned for each individual, there has been no restrictions on shoe styles. Note that the age of subjects is ranging from 18 to 65. In this way, researchers compare treatments within blocks controlling heterogeneity of individuals. The research team also repeats this experiment design with 300 people in the US aged between 18 and 65 chosen at random.
Question:
What are the experimental units?
What is the control?
Hoe much replication was used?
How was randomization used?
In: Statistics and Probability
B1 - Snow Company started operations on February 1, 2020 by depositing $3,000,000 cash in the bank as capital. The following transactions took place during the first month of operations:
February 3: Purchased supplies for $22,500 in cash.
February 9: Purchased equipment for $255,000, paid $105,000 in cash and the remaining amount will be paid after 10 days.
February 12: Received a bill from Dubai News for advertising amounted to $1,650.
February 14: Paid $24,000 salaries in cash.
February 16: Paid $6,000 utilities expense in cash.
February 17: Provided services to customers for $195,000 in cash.
February 19: Paid $150,000 for equipment purchased on February 9.
February 28: The owner withdrew $7,500 cash for personal use.
Required:
In: Accounting
B1 - Snow Company started operations on February 1, 2020 by depositing $3,000,000 cash in the bank as capital. The following transactions took place during the first month of operations:
February 3: Purchased supplies for $22,500 in cash.
February 9: Purchased equipment for $255,000, paid $105,000 in cash and the remaining amount will be paid after 10 days.
February 12: Received a bill from Dubai News for advertising amounted to $1,650.
February 14: Paid $24,000 salaries in cash.
February 16: Paid $6,000 utilities expense in cash.
February 17: Provided services to customers for $195,000 in cash.
February 19: Paid $150,000 for equipment purchased on February 9.
February 28: The owner withdrew $7,500 cash for personal use.
Required:
In: Accounting
The Brown Company purchased equipment on June 1, 2020. Assuming the cost of the equipment is $70,000, the residual value is $6,000, a useful life of 4 years and the use of the diminishing balance method using 2 times the straight line rate. The company's year end is December 31.
Round all answers to the nearest dollar.
1) What is depreciation expense for the year ended December 31, 2020? $ Answer
2) What is the depreciation rate (%)? Answer %
3) What is accumulated depreciation for the year ended December 31, 2022? $ Answer
4) What is the carrying value of the asset for the year ended December 31, 2024? Answer
5) What is depreciation expense for the year ended December 31, 2024? $ Answer
You were asked to prepare the journal entry to record the sale of the above equipment on December 31, 2022.
Is it a gain or loss if the equipment was sold for $10,000? Answer LOSS or GAIN
How much is the gain or loss? $ Answer
In: Accounting