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Entries to record a hedge of a forecasted purchase with an option. A Midwest food processor forecasts purchasing 300,000 pounds of soybean oil in May. On February 20, the company acquires an option to buy 300,000 pounds of soybean oil in May at a strike price of $1.60 per pound. Information regarding spot prices and option values at selected dates is as follows:February 20February 28March 31April 20Spot price per pound$161$159$162$1.64Fair value of option$3,800$1,200$6,800$12,500The company settled the option on April 20 and purchased 300,000 pounds of soybean oil on May 3 at a spot price of $1.63 per pound. During May, the soybean oil was used to produce food. One-half of the resulting food was sold in June. The change in the option's time value is excluded from the assessment of hedge effectiveness.1. Prepare all necessary journal entries through June to reflect the above activity.2. What would the effect on earnings have been had the forecasted purchase not been hedged?
Product X is a consumer product with a retail price of $9.95. Retailer's margins on the product are 40% (based on the selling price to consumers) and wholesaler's margins are 8% (based on the selling price to retailers). The size of the market is ..
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Advise the shareholders how the payments in Note (xiv) will be treated for tax purposes and advise Graham of the assessability/deductibility of his wagering.
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Axis uses periodic inventory system. Using FIFO method, evaluate the amount of cost of goods sold for the month?
Prepare the entry Doeby will record to reflect this additional acquisition.
What if we simply bartered for all? Would our economy grow - with that said, is pursuit of ALL self interest in a contract unethical and if not, at what point does it become unethical?
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