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Home / Questions / On December 15, a company enters into a foreign currency forward to buy €100,000 at C$I.60

On December 15, a company enters into a foreign currency forward to buy €100,000 at C$I.60

On December 15, a company enters into a foreign currency forward to buy €100,000 at C$I.60 per euro in 30 days. The exchange rate on the day of the company's year-end of December 31 was C$1.55: €l.

 

Requirement:

Record the journal entries related to this forward contract.

6) A company pays $7,000 to purchase futures contracts to buy 200 oz of gold at $1,600/oz. At the company's year-end, the price of gold was $1,625 and the value of the company's futures contracts increased to $10,000.

 

Requirement:

Record the journal entries related to these futures.

 

7) A company pays $5,000 to purchase futures contracts to buy 50 oz of silver at $40/oz. At the company's year-end, the price of silver rose and the value of the company's futures contracts increased to $6,000.

 

Requirement:

Record the journal entries related to these futures.

8) On August 15, 2011, Madison Company issued 80,000 options on the shares of MVC (Middefield Valley Corporation). Each option gives the option holder the right to buy one share of MVC at $70 per share until March 16, 2012. Madison received $800,000 for issuing these options. At the company's year-end of December 31, 2011, the options contracts traded on the Montreal Exchange at $9.50 per contract. On March 16, 2012, MVC shares closed at $63 per share, so none of the options was exercised.

 

Requirement:

Record the journal entries related to these call options.

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