On January 1, 2020, Oriole Inc. entered into a futures contract to purchase U.S. $5,390 for $5,670 Canadian in 30 days on the Futures Exchange. On January 15, the fair value of the contract was $39 (reflecting the present value of the future cash flows under the contract). Oriole Inc. was required to deposit $22 with the stockbroker as a margin. Prepare the journal entries to update the books on January 1 and 15. (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. Record journal entries in the order presented in the problem.)
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- During 2019, Mickey Mouse Company owns trading securities with Minnie Mouse Company. The cost of trading securities and their market value on December 31, 2019 are as follows:Security Cost Market Value X 750,000 900,000 Y 1,200,000 1,350,000 Z 2,700,000 2,200,000Also in 2019, Mickey Mouse Company had net income of P1,500,000. What is the amount of net income after making an adjustment necessary for trading securities?On March 1 the price of a commodity is $1,000 and the December futures price is $1,015. On November 1 the price is $970 and the December futures price is $973. A user of the commodity entered into a December futures contract on March 1 to hedge the purchase of the commodity on November 1. It closed out its position on November 1. What is the effective purchase price (after taking account of hedging) paid by the company for the commodity? a. $1,014 b. $1,012 c. $1,016 d. $1,018On January 1, 2015, Nathan Co paid P6,000 cash to acquire a put foreign exchange option for FC37,500 which expires at the end of the year. The option hedges 2015's forecasted sales of FC37,500. Nathan's fiscal year ends every October 31. non-derivative contract 1/1/15 10/31/15 12/31/15 Spot rate (market price) Strike price (exercise price) Fair value of put option 5) Determine the intrinsic value at inception of the option contract. a. P 12,750 b. P 4,125 P1.45 P1.20 P1.30 1.40 1.40 1.40 6,000 25,250 c. P 6,000 d. P 0
- On March 1 the price of a commodity is $1,000 and the December futures price is $1,015. On November 1 the price is $980 and the December futures price is $981. A producer of the commodity entered into a December futures contract on March 1 to hedge the sale of the commodity on November 1. It closed out its position on November 1. What is the effective sale price (after taking account of hedging) received by the company for the commodity? a. $1,016 b. $1,018 c. $1,012 d. $1,014On September 1, Westbrook Corporation purchased goods from a foreign supplier at a price of 1,000,000 francs and will make payment in three months on December 1. On September 1, Westbrook acquired an option to purchase 1,000,000 francs in three months at a strike price of $0.852. The time value of the option is excluded from the assessment of hedge effectiveness, and the change in time value is recognized in net income over the life of the option. Relevant exchange rates and option premia for the franc are as follows: Date September 1 September 30 December 1 Spot Rate $ 0.852 0.858 0.870 Call Option Premium for December 1 (strike price $0.852) $0.0020 0.0075 N/A Westbrook must close its books and prepare its third-quarter financial statements on September 30. The goods purchased on September 1 are sold in December. a-1. Assuming that Westbrook designates the foreign currency option as a cash flow hedge of a foreign currency payable, prepare journal entries for the import purchase and…On 1 July 2018 Bombo Ltd issues $2 million in six-year debentures that pay interest each sixmonths at a coupon rate of 8 per cent. At the time of issuing the securities, the market requires arate of return of 6 per cent. Interest expense is determined using the effective-interest method.Required:(i) Determine the issue price of the debenture. (ii) Provide the journal entries at: 1 July 2018, 30 June 2019, & 30 June 2020. I do have 3 answers but different, very confused journal entries regarding interest calculation please guide me the right journal
- On February 18, 2021, Union Corporation purchased 1,311 IBM bonds as a long-term investment at their face value for a total of $1,311,000. Union will hold the bonds indefinitely, and may sell them if their price increases sufficiently. On December 31, 2021, and December 31, 2022, the market value of the bonds was $1,273,000 and $1,330,000, respectively. Required: 2. & 3. Prepare the adjusting entry for December 31, 2021 and 2022. (If no entry is required for aAt December 31, 2020, the end of its first year of operations, the non-trading securities for Oriole AG are as follows. They have the same cost and fair value. The securities are considered to be a long-term investment. Security A B C Date Cost CHF17,800 Dec. 31 12,900 22,700 CHF53,400 Fair Value CHF15,800 14,500 18,600 Prepare the adjusting entry at December 31, 2020, to report the securities at fair value. (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 O for the amounts.) CHF48,900 Account Titles and Explanation Unrealized Gain or Loss-Equity Fair Value Adjustment-Non-Trading Debit CreditOn January 1, 2024, LLB Industries borrowed $212,000 from Trust Bank by Issuing a two-year, 10% note, with interest payable quarterly . LLB entered into a two-year interest rate swap agreement on January 1, 2024, and designated the swap as a fair value hedge. Its Intent was to hedge the risk that general Interest rates will decline, causing the fair value of its debt to Increase. . The agreement called for the company to receive payment based on a 10% fixed Interest rate on a notional amount of $212,000 and to pay Interest based on a floating interest rate. The contract called for cash settlement of the net interest amount quarterly and rates reset at the beginning of each period. . Floating (SOFR) settlement rates were 10% at January 1, 8% at March 31, and 6% at June 30 and September 30, 2024. The fair values of the swap are quotes obtained from a derivatives dealer. Those quotes and the fair values of the note are as indicated below. Assume LLB uses the shortcut method. Fair value of…
- On January 1, 2024, LLB Industries borrowed $228,000 from Trust Bank by issuing a two-year, 10% note, with interest payable quarterly. • LLB entered into a two-year interest rate swap agreement on January 1, 2024, and designated the swap as a fair value hedge. Its intent was to hedge the risk that general interest rates will decline, causing the fair value of its debt to increase. • The agreement called for the company to receive payment based on a 10% fixed interest rate on a notional amount of $228,000 and to pay interest based on a floating interest rate. The contract called for cash settlement of the net interest amount quarterly and rates reset at the beginning of each period. • Floating (SOFR) settlement rates were 10% at January 1, 8% at March 31, and 6% at June 30 and September 30, 2024. The fair values of the swap are quotes obtained from a derivatives dealer. Those quotes and the fair values of the note are as indicated below. Assume LLB uses the shortcut method. Fair value…On January 1, 2021, LLB Industries borrowed $280,000 from Trust Bank by issuing a two-year, 10% note, with interest payable quarterly • LLB entered into a two-year interest rate swap agreement on January 1, 2024, and designated the swap as a fair value hedge. Its intent was to hedge the risk that general interest rates will decline, causing the fair value of its debt to increase • The agreement called for the company to receive payment based on a 10% fixed interest rate on a notional amount of $280,000 and to pay interest based on a floating interest rate. The contract called for cash settlement of the net interest amount quarterly and rates reset at the beginning of each period. • Floating (SOFR) settlement rates were 10 % at January 1, 8% at March 31, and 6% at June 30 and September 30, 2024. The fair values of the swap are quotes obtained from a derivatives dealer. Assume that LLB does not elect to use the shortcut method. The swap is deemed highly effective, but it is not assumed…On January 1, 2024, LLB Industries borrowed $210,000 from Trust Bank by issuing a two-year, 10% note, with interest payable quarterly. ⚫ LLB entered into a two-year interest rate swap agreement on January 1, 2024, and designated the swap as a fair value hedge. Its intent was to hedge the risk that general interest rates will decline, causing the fair value of its debt to increase. • The agreement called for the company to receive payment based on a 10% fixed interest rate on a notional amount of $210,000 and to pay interest based on a floating interest rate. The contract called for cash settlement of the net interest amount quarterly and rates reset at the beginning of each period. • Floating (SOFR) settlement rates were 10% at January 1, 8% at March 31, and 6% at June 30 and September 30, 2024. The fair values of the swap are quotes obtained from a derivatives dealer. Those quotes and the fair values of the note are as indicated below. Assume LLB uses the shortcut method. Fair value…