Barnes Company Entered into a Forward Contract During the Current

question 29

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:

Standard Deviation

A statistic that measures the dispersion or variability in a dataset relative to its mean, indicating how spread out the numbers are.

Mean

The arithmetic average of a set of values, calculated by dividing the sum of these values by the number of values.

Standard Deviations

A measure of the amount of variation or dispersion of a set of values, indicating how much individual data points differ from the mean.