A Company Pays $7,000 to Purchase Futures Contracts to Buy

question 92

Essay

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

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Definitions:

Ureteral

Pertaining to the ureter, the tube that carries urine from the kidney to the bladder.

Concentrations

The measure of the amount of a given substance in a specific volume of solution, often expressed in terms of mass per unit volume.

Overnight

Refers to something happening during or for the duration of one night, often used to describe shipments, mail delivery, or hotel stays.

Urine Crystals

Solid particles that form in urine from minerals in the urinary tract.