KidCo Bought Forward Contracts on 20,000 Bushels of Corn at $1.65

question 7

Multiple Choice

KidCo bought forward contracts on 20,000 bushels of corn at $1.65 per bushel.Corporate tax rates are 35.00%.Revenue is $100,000 and other costs are $60,000.Spot prices on corn are $1.75 per bushel.Calculate the after-tax net income.

• A) $7,000 loss
• B) $7,000 gain
• C) $4,550 loss
• D) $4,550 gain

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Definitions:

Red Bone Marrow

Vascularized, modified connective tissue that is sometimes found in the cavities of spongy bone; site of blood cell formation.

Medullary Cavity

The central cavity of bone shafts where yellow marrow (fat cells) is stored.

Dense Fibrous Connective Tissue

Type of connective tissue containing many collagen fibers packed together; found in tendons and ligaments, for example.

Spongy Bone

Type of bone that has an irregular, meshlike arrangement of thin plates of bone.