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A Company Pays $5,000 to Purchase Futures Contracts to Buy

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Essay

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.
Required:
Record the journal entries related to these futures.


Definitions:

Supply

Supply is the total amount of a product or service that is available to consumers at a given price range and time period.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a given price over a specified period of time.

Cell Phones

Portable electronic devices used for mobile communication, including voice calls, text messaging, and internet access.

MP3 Players

Electronic devices designed to play digital audio files in MP3 format, allowing for portable music playback.

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