On September 23, Gensil Company Buys 40 Contracts on the Chicago

question 24

Essay

On September 23, Gensil Company buys 40 contracts on the Chicago Board of Trade to deliver orange juice to a certified warehouse in November.Each contract is in units of 15,000 pounds at a futures price of $0.851 per pound.The initial margin on the contract is set at $18,000, with a maintenance margin of $14,000.The futures prices are as follows:
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$$\begin{array} { r r r } \text { Sept. } 23 & \text { Sept. } 24 & \text { Sept. 25 } \\\$ 0.851 & \$ 0.847 & \$ 0.850\end{array}$$
Required:
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a.Journalize the entries for Gensil Company for the first three days of the contract.?
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b.What is meant by the maintenance margin and how could it affect Gensil Company?

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