Concord Corporation was a small company in the energy sector. Concord operated by purchasing natural gas...
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Concord Corporation was a small company in the energy sector. Concord operated by purchasing natural gas from the companies that extracted it, then selling the natural gas to refıneries to be processed. Because the price for natural gas fluctuated, Concord often entered into future contracts as a way of managing the risk. On May 15, 2020, Concord entered into a future contract to sell 36,000 cubic metres of natural gas at a price of $4.60 per cubic metre (which was the market value on May 15). The broker with whom Concord arranged the contract required a 20% deposit, which Concord paid in cash. On June 30, Concord's year-end, the price of natural gas was $5.10 per cubic metre. On July 1, Concord closed out the contract at the same natural gas price, settling net without delivering the gas. Prepare the journal entries to record the futures contract. (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 O for the amounts.) Date Account Titles and Explanation Debit Credit (To record the payment of the deposit.) (To record loss on derivative.) (To record additional deposit.) July 1 (To close out derivative contract.) Concord Corporation was a small company in the energy sector. Concord operated by purchasing natural gas from the companies that extracted it, then selling the natural gas to refıneries to be processed. Because the price for natural gas fluctuated, Concord often entered into future contracts as a way of managing the risk. On May 15, 2020, Concord entered into a future contract to sell 36,000 cubic metres of natural gas at a price of $4.60 per cubic metre (which was the market value on May 15). The broker with whom Concord arranged the contract required a 20% deposit, which Concord paid in cash. On June 30, Concord's year-end, the price of natural gas was $5.10 per cubic metre. On July 1, Concord closed out the contract at the same natural gas price, settling net without delivering the gas. Prepare the journal entries to record the futures contract. (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 O for the amounts.) Date Account Titles and Explanation Debit Credit (To record the payment of the deposit.) (To record loss on derivative.) (To record additional deposit.) July 1 (To close out derivative contract.)
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Answer Date Paxdiruoxs 1505h Derivatices Debosit Alc Cosh Debit Coedit 331... View the full answer
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Cost Management Measuring, Monitoring and Motivating Performance
ISBN: 978-1119185697
3rd Canadian edition
Authors: Leslie G. Eldenburg, Susan K. Wolcott, Liang-Hsuan Chen, Gail Cook
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