Commodity Futures The Davis Company grows soybeans and processes them into soybean meal for eventual sale to
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a. Assuming that Davis deposits $75,000 margin with the broker on August 1, prepare the journal entries it makes on August 1, on September 30, and on October 28.
b. If Davis sells the soybean meal in the spot market on November 2, 2014, for $348.50 per ton, calculate its net cash gain or loss from the sale, taking into account the hedging transaction.
c. Suppose instead that Davis purchased the 10,000 tons of soybean futures on August 1, 2014, closing the long position on October 28, 2014. Calculate the net cash gain or loss on the long futures position and compare its accounting treatment with the gain or loss on the short futures position in part a above at October 28, 2014. Broker
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Related Book For
Advanced Accounting
ISBN: 978-1934319307
2nd edition
Authors: Susan S. Hamlen, Ronald J. Huefner, James A. Largay III
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