Barnes Company Entered into a Forward Contract During the Current

question 32

Multiple Choice

Barnes Company entered into a forward contract during the current year to hedge the risk of a material supply cost increase.Based on the current market,at year-end the present value of the estimated amount they will have to pay in ten months is $750,000.What entry would be recorded at year-end closing,assuming that no amount was recorded for this contract until this time?

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Definitions:

Federal Revenue

The income received by the federal government from various sources, such as taxes, fees, and investments.

Domestic Producers

Companies and individuals within a country that produce goods and services for the local market.

Quotas

Quantitative limits set by governments on the amount of specific goods or services that can be imported or exported during a specified time frame.

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service and the total amount that they actually do pay.