Ted Purchased Two October Futures Contracts on Cotton at the Closing

question 205

Multiple Choice

Ted purchased two October futures contracts on cotton at the closing price yesterday and sold the contracts at the opening price today. What is the amount of Ted's profit or loss on this investment?

• A) -$500
• B) -$350
• C) $175
• D) $1,425
• E) $1,650

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Definitions:

Salaries Expense

An expense recorded to represent wages or salaries paid to employees.

Salaries Payable

The liability account that contains the amounts of any salaries owed to employees, which have not yet been paid.

Supplies Account

An account used to track the costs of small items or materials that are used in the operations of a business.

Adjusting Journal Entry

A journal entry made at the end of an accounting period to allocate income and expenditures to the correct period, ensuring the financial statements reflect accurate and up-to-date information.