Crab house joe operates a chain of fine seafood restaurants

Assignment Help Accounting Basics

Reference no: EM13601154

Crab House Joe operates a chain of fine seafood restaurants. The company makes very detailed long-term planning. On October 1, 2011, the company determined it would need to purchase 800,000 pounds of New England lobster on January 1, 2013. Because of the fluctuations in the price of Maine lobster, on October 1 the company negotiated a special forward contract with Sam Investment Bank for Crab House Joe to purchase 800,000 pounds of Maine lobster on January 1, 2013, at a price of $9,600,000. The price of Maine lobster was $12 per pound on October 1. Sam Investment Bank has a staff of financial analysts who specialize in forecasting lobster prices. These analysts are predicting a drop in worldwide lobster prices between October 1, 2011, and January 1, 2013.

On December 31, 2011, the price of a pound of Maine lobster is $15. On December 31, 2012, the price of a pound of Maine lobster is $9. The appropriate discount rate throughout this period is 10%.

Instructions: Make all journal entries necessary on Crab House Joe's books in 2011, 2012, and 2013 to record the forward contract and the purchase of the lobster. For purposes of estimating future settlement payments under the forward contract, assume that the current price of lobster is the best forecast of the future price.

Reference no: EM13601154

Questions Cloud

Outdoor outfitters has created a flexible budget for the : outdoor outfitters has created a flexible budget for the 70000-unit and the 80000-unit levels of activity as shown

Determine the value of ending inventory if the sales value : oregon lumber processes timber into four products. during january the joint costs of processing were 280000. there was

Assuming that estimated overhead costs are 3000 which are : propats manufactures three souvenir products and has the following direct cost when three 1000-unit batches one for

Calculate the total dividends and the per-share dividends : love theatre inc. owns and operates movie theaters throughtout new mexico and utah. love theatre has declared the

Crab house joe operates a chain of fine seafood restaurants : crab house joe operates a chain of fine seafood restaurants. the company makes very detailed long-term planning. on

The company received an order on dec29 that was boxed and : the company received an order on dec.29 that was boxed and was sitting on the loading dock awaiting pick-up on december

As the manager of the accounts receivable department for : as the manager of the accounts receivable department for beavis leather goods ltd. you recently noticed that kelly

Red sauce canning company processes tomatoes into catsup : red sauce canning company processes tomatoes into catsup tomato juice and canned tomatoes. during the summer of 20x2

York yoyos began 2008 with a debit balance in accounts : york yoyos began 2008 with a debit balance in accounts receivable of 4320000 and a credit balance in allowance for

User Account

All Pages