Arlington steel company is a producer of raw steel and steel-related products. on january 3, 2022, arlington enters into a firm commitment to purchase 10,000 tons of iron ore pellets from a supplier to satisfy spring production demands. the purchase is to be at a fixed price of $63 per ton on april 30, 2022. to protect against the risk of changes in the fair value of the commitment contract, arlington enters into a futures contract to sell 10,000 tons of iron ore on april 30 for $63/ton (the current price). the contract calls for net cash settlement, and the company must report changes in the fair values of its hedging instruments each quarter.
required:
on march 31, the price of iron ore fell to $61/ton, and then to $60/ton on april 30.
1. calculate the net cash settlement at april 30, 2022.
2. prepare the journal entries for the period january 3 to april 30, 2022, to record the firm commitment, necessary adjustments for changes in fair value, and settlement of the futures contract.
Answers
1. The net cash settlement on that day i.e., April 30, 2022 would be $30,000
2. The journal entry will be:
Accounts Payable $630,000
Loss on Futures Contract $30,000
Fair Value Adjustment $13,000
Cash $647,000
1. To calculate the net cash settlement on April 30, 2022, we need to consider the difference between the fixed price of $63 per ton and the actual market price on that day.
On March 31, 2022, the market price of iron ore was $61 per ton, which means that Arlington would have a gain of $2 per ton on their futures contract. However, as the futures contract is a net cash settlement, the gain would be settled in cash.
Therefore, the net cash settlement on April 30, 2022, would be:
($63 - $61) x 10,000 tons = $20,000
On April 30, 2022, the market price of iron ore fell further to $60 per ton, which means that Arlington would have a gain of $3 per ton on their futures contract. Therefore, the net cash settlement on that day would be:
($63 - $60) x 10,000 tons = $30,000
2. The journal entries to record the firm commitment, necessary adjustments for changes in fair value, and settlement of the futures contract are as follows:
January 3, 2022:
Accounts Payable (10,000 tons x $63/ton) $630,000
Commitment to purchase iron ore pellets
To record the firm commitment to purchase 10,000 tons of iron ore pellets at a fixed price of $63/ton on April 30, 2022.
March 31, 2022:
Loss on Futures Contract $20,000
Fair Value Adjustment $20,000
To record the fair value adjustment for the futures contract due to the decrease in the market price of iron ore to $61/ton on March 31, 2022.
April 30, 2022:
Accounts Payable $630,000
Loss on Futures Contract $30,000
Fair Value Adjustment $13,000
Cash $647,000
To record the settlement of the firm commitment to purchase 10,000 tons of iron ore pellets and the futures contract to sell 10,000 tons of iron ore. The loss on the futures contract is the difference between the fixed price and the actual market price on April 30, 2022, which is $3 per ton or $30,000 in total. The fair value adjustment is the difference between the fair value of the futures contract on April 30, 2022, and its fair value on March 31, 2022, which is $13,000. The cash amount of $647,000 represents the net cash settlement amount that Arlington pays to the supplier after receiving the cash settlement from the futures contract.
In summary, by entering into the futures contract, Arlington Steel Company was able to protect itself against changes in the fair value of its commitment to purchase iron ore pellets. The fair value adjustments and the settlement of the futures contract were properly recorded through journal entries, allowing for accurate reporting of the company's financial performance.
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Related Questions
why are fiscal tools sometimes difficult to use in regulating the economy
Answers
Fiscal tools, such as taxation and government spending, are essential tools in regulating the economy. However, they can be difficult to use because they are subject to various limitations and challenges.
One of the main challenges in using fiscal tools is their impact on the budget deficit. Increases in government spending and tax cuts can lead to a rise in the budget deficit, which can be detrimental to the overall health of the economy. Similarly, decreases in government spending and tax hikes can lead to a decrease in economic growth and employment rates.
Another challenge is the time lag involved in the implementation of fiscal policies. It can take several months or even years for the full impact of fiscal policies to be felt. This makes it difficult for policymakers to adjust their policies in a timely manner.
Additionally, fiscal tools can also have unintended consequences. For example, tax cuts may increase consumer spending and boost economic growth, but they can also lead to an increase in inflation. Similarly, increased government spending can stimulate economic growth, but it can also lead to a rise in interest rates.
In summary, fiscal tools can be difficult to use in regulating the economy due to budget constraints, time lags, and unintended consequences. Policymakers must carefully consider the potential impact of these tools and balance their use with other economic policies.
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When making decisions, managers often must decide between doing what is beneficial for the firm in the short term, and what is beneficial for both the firm and society in the long term. To address this conflict, a firm must
Answers
When making decisions, managers are often faced with a conflict between what is beneficial for the firm in the short-term and what is beneficial for both the firm and society in the long-term.
This conflict arises because the actions that benefit the firm in the short-term may not necessarily align with the interests of society as a whole, which can lead to negative consequences for both the company and society in the long-term.
To address this conflict, a firm must adopt a long-term orientation and consider the broader social and environmental impacts of its decisions. This means looking beyond immediate financial gains and recognizing that actions taken today can have far-reaching implications for the company's reputation, customer loyalty, employee morale, and overall sustainability.
Firms that prioritize social responsibility and sustainable business practices are more likely to build strong relationships with stakeholders, including customers, employees, investors, and regulators. They are also better equipped to weather economic downturns and other disruptions, as they have diversified their risk and invested in building resilient supply chains and communities.
Ultimately, the key to addressing the conflict between short-term gains and long-term benefits is a commitment to corporate social responsibility (CSR) and sustainable business practices. By prioritizing the needs of society and the environment alongside those of shareholders, firms can create value for all stakeholders over the long-term, ensuring their continued success and impact.
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if a company has 5 employees with annual salaries of $90,000, $60,000 ,$70,000 ,$90,000 and $20,000 respectively, what is the mean annual salary at the company?
Answers
Answer:
Mean annual salary = $66,000
Explanation:
Given the following data;
Number of employees = 5Employee's salaries = $90,000, $60,000 ,$70,000 ,$90,000 and $20,000.To find the mean annual salary at the company;
First of all, we would find the total amount of salaries.
Total amount = 90,000 + 60,000 + 70,000 + 90,000 + 20,000
Total amount = $330,000
Next, we would calculate the mean annual salary at the company;
\( Mean \; annual\; salary = \frac {Total \; salary}{Number \; of \; employees} \)
Substituting into the above formula, we have;
\( Mean \; annual\; salary = \frac {330,000}{5} \)
Mean annual salary = $66,000
Answer:
66,000
Explanation:
How does change in cost of energy and raw materials, borrowing and premises affect a house building company
Answers
Answer:
A shift in the cost of electricity and raw materials may have a major influence on a home construction firm. For example, if the cost of electricity and raw materials rises, the corporation may have to spend more on these items, resulting in higher production expenses. This rise in manufacturing costs may eventually result in lower profit margins or an increase in the final price of the houses, making them less competitive in the market.
Likewise, changes in borrowing costs might have an influence on the company's profitability. If interest rates rise, the cost of borrowing money to invest in the firm rises, resulting in greater debt-service expenses. This may limit the company's capacity to invest in growth possibilities, which can be negative on long term profitability impact.
Likewise, changes in borrowing costs might have an influence on the company's profitability. If interest rates rise, the cost of borrowing money to invest in the firm rises, resulting in greater debt-service expenses. This may limit the company's capacity to invest in growth possibilities, which might harm long-term profitability.
Changes in facility expenses might also have an impact on the company's profitability. For example, increasing the cost of rent or mortgage payments for the company's offices or facilities may result in increased overheads and lower profitability. Furthermore, if the firm decides to grow or relocate, it may incur considerable upfront expenses, which may have an impact on short-term profitability.
Sandy is allowed to spend $8. 00 to create a new candle for the candle store. Sandy told the owner she would like to sell her candles for 12. 00 each. What is snady's gross profit margin?
Answers
She earns a $4.00 gross profit on each candle she sells, which is 33.33% of the selling price.
To calculate Sandy's gross profit margin, we need to first determine the cost of producing one candle. If she is allowed to spend $8.00 to create a new candle, we can assume that the cost of producing one candle is $8.00.
To calculate the gross profit margin, we need to subtract the cost of producing one candle from the selling price of one candle, and then divide the result by the selling price. So:
Gross profit margin = (Selling price - Cost of goods sold) / Selling price
Selling price = $12.00
Cost of goods sold = $8.00
Gross profit margin = ($12.00 - $8.00) / $12.00
Gross profit margin = $4.00 / $12.00
Gross profit margin = 0.3333
So Sandy's gross profit margin is 0.3333, or 33.33%. This means that for each candle she sells, she is earning a gross profit of $4.00, which represents 33.33% of the selling price.
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Which of the following is a disadvantage to Linux?
Olearning curve
O customizability
O cost
Ofreedom
Answers
Answer:
Learning curve
Explanation:
What does gross domestic product GDP measure ?
Answers
The GDP tracks the Monetary value of final products and services. Purchased by the end-user and manufactured in the country during a specified period of time.
GDP measures the total market value of all goods and services produced in the United States in a given year. Compared to previous periods, GDP shows whether an economy is expanding and producing more goods and services or shrinking and producing less.
GDP provides a snapshot of a country's economy used to estimate the size of the economy and its growth rate. GDP can be calculated in three ways using expenditure, production, or income, and adjusted for inflation and population for deeper insight. Counts all electricity generated within a country's borders.
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______ policy seeks to foster or discourage various economic or social activities, typically through subsidies or tax breaks.
Answers
Answer:
domestic
Explanation:
try it but i don't know! just a guess
Shazia manages a butcher shop. Recently, the butcher shop has had trouble competing with national grocery store chains. Shazia wants to develop a list of possible courses of action to attract more customers, so she gathers her team. They discuss the issue and suggest ideas to solve the problem. This is called:_________.
Answers
To develop a consistent marketing strategy, it may be necessary to set up a team meeting to suggest ideas for solving the problem, which is called brainstorming.
Definition of brainstorming
It is a technique used in organizations to raise ideas and solutions on a given problem, starting from the meeting with the team, where each member can contribute with ideas that generate innovation and a course of action for the situation.
Therefore, brainstorming can be used in the internal environment, when there is a need for strategic planning, and also in the external environment, in the development of a marketing campaign for example.
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The rise or fall in the price of an item is an.example of which of the following?
O Inflation risk
O Personal risk
O Income risk
O Interest rate risk
Answers
Answer:
Inflation risk
Explanation:
I am taking a class this right now
Answer:
income risk
Explanation:
i do the test
ballman corporation determines that it cannot collect a total of $300 from a customer. using the allowance method, the journal entry to write off the amount would be:
Answers
When Ballman Corporation decides it cannot collect a total of $300 from a customer, using the allowance method, the journal entry to write off the amount would be: Debit: Allowance for Doubtful Accounts $300Credit:
The entry above records the amount that was previously established by the corporation as a reduction of its accounts receivable. The Allowance for Doubtful Accounts is a contra-asset account used to reduce the company's total accounts receivable to reflect only the amounts that the corporation thinks it will collect.As a result, the balance sheet will still display accounts receivable, but the allowance for doubtful accounts will be subtracted to calculate the net accounts receivable, which will reflect the total amount that the corporation anticipates collecting.
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How many times does 50 go into 1 million please help im dieing to know
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Answer:20,000 times
Explanation:
Describe the three different ways the argument section of a cover letter can be formatted.
Answers
Answer:
i think they are personal, formal and informal
Explanation:
im not sure but i think thats it
The three different ways for formatting the argument section of a cover letter are paragraphs, bullet points, and T-form.
The formal paragraph format uses the block paragraphs ideal for a business letter, wherein the argument of the cover letter is presented in the second and third paragraphs in complete sentences.
The bullet points format lists the argument of the cover letter as bulleted points instead of in paragraph form. Using bullet points focuses on the applicant's qualifications, making them attractive to the reader.
Lastly, the argument section of the cover letter can be presented in a T-form. This format enables the applicant to compare the requirements of the vacancy notice with their qualifications.
Thus, the argument section of a cover letter can be formatted uniquely, depending on the occasion and the reader.
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when should an event programing be used
Answers
Answer:
The utilization of the given topic is summarized throughout the below section.
Explanation:
Event-driven programming language shall be used if the software doesn't somehow monitor the sequential order of such occurrence.The software circulation or activity was mostly directly guided to an external mechanism like a consumer or client (e.g. a GUI), a whole other method (e.g. a customer or a server).How did Coca-Cola materialize into an American value? How did this help and hurt Coca-Cola? (and, in some ways, America itself?)
Answers
Answer: Brilliant marketing and commercials
Explanation:
One of the top advantage any firm or organization is the ability for it to be consistent with it's advertisement and marketing policy in a creative manner and to deliver when people purchase it's products. This is how Coca cola became famous within the American industry, it grew by virtue of it's brilliance in marketing, excellent and always creative commercials. These all helped pushed Coca cola into wider region of the American market and into the world.
One of the determinants of employees' willingness to exert effort is the degree to which they value the rewards offered by the organization.
Answers
Answer:
True.
Explanation:
An employee can be defined as an individual who is employed by an employer of labor to perform specific tasks, duties or functions in an organization.
Basically, an employee is saddled with the responsibility of providing specific services to the organization or company where he is currently employed while being paid a certain amount of money hourly, daily, weekly, or monthly depending on the contractual agreement between the two parties (employer and employee).
Hence, while an employer may be the owner of a business firm or company, an employee is a subordinate employed to provide unwavering services to the employer while also, being professional and diligent at all times.
An equality norm refers to a reward system in which the employer or human resource manager decide to compensate or pay the entire workforce the same amount of money without discrimination or favoritism.
Basically, it's paid regardless of individual productivity levels, in order to promote the ability to work effectively in groups.
However, one of the determinants of employees' willingness to exert effort is the degree to which they value the rewards offered by the organization. These rewards usually includes salary, overtime, transportation (car), house, pension, healthcare, allowances, etc.
Hence, the willingness of an employee to put in his best at his place of work by exerting more effort, is largely dependent on the reward system designed and being implemented in the organization.
For example, an employee who's given an official car with a driver, apartment, healthcare and work bonus is more inclined to perform excellently and loyal to his employer.
"Development has a negative impact on our environment" Motivate why you agree with the
statement
[8]
Answers
industrial lead to water pollution
Which qualifications are most helpful for Foreign Service Careers? Check all that apply.
Foreign language skills
Stress management skills
Design skills
Independence
Math skills
Adaptability and flexibility
Answer: foreign language skills, stress management skills, and adaptability and flexibility
Answers
Answer:here's the right answer for this question
Explanation:edge2023
1. This bank statement is most likely for what kind of account? Provide at least two pieces of evidence from the statement that explain why. (2 points)
2. Which transaction on the bank statement is most likely a paycheck? How do you know? (1 point)
3. The owner of the account wants to buy a $750 refrigerator. Explain why this would be a poor decision right now, based solely on information shown on the bank statement. (1 point)
4. The owner of the account may have already overdrawn. what evidence from the statement indicates that this may be the case? (1 point)
Answers
The bank statement is for a current account. The evidence to show that's it's a current account include:
The check depositThe pending of some checks deposited and check#509 withdrawn.The transaction on the bank statement that is most likely a paycheck is the automatic deposit of $2055.
The owner of the account cannot buy the $750 refrigerator because he has a balance of $240.
The from the statement indicates that the owner of the account may have already overdrawn is because the total withdrawals are -$330.57.
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Answer:
The guy above really helped got a 100 on this because of this guy thank you.
Explanation:
In a venture capital firm, what does the word "capital" refer to? Question 5 options: a. the capital of the state where it's located
b. the capital, or money, they invest in businesses c. the way they use capital letters for all their communications
d. where their offices are housed in the state capitol building
Answers
In a venture capital firm, the word "capital" refers to B. the capital, or money, they invest in businesses.
Venture capital firms are financial institutions that specialize in providing funding to start-ups and emerging businesses, often in exchange for equity or ownership stakes in these companies. They play a critical role in the growth and development of innovative businesses by providing the financial resources and guidance necessary to scale and succeed.
The term "capital" in this context refers to the financial resources the firm allocates for investments in these companies. This capital can come from various sources, including private investors, institutional funds, or the firm's own resources. Venture capital firms use their expertise and networks to identify promising companies, evaluate their potential, and support their growth through strategic capital deployment.
In summary, the word "capital" in a venture capital firm is related to the money they invest in businesses, supporting their growth and development by providing the necessary financial resources. This usage of the term is not related to the location of the firm or the way they use capital letters in their communications. Therefore, the correct option is B.
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Answer:
ITS B
Explanation:
I JUST GOT A 100%
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NEED HELP AS SOON AS POSSIBLE
Answers
Answer:it is 10,000
Explanation:
Answer:
Q1: Total assets= 25,200
Q2: Total liabilities = 16,500
Explanation:
Q1: Add all your assets to get total assets
Q2: Add all your liabilities to get total liabilities
Q3: Your net worth, quite simply, is the dollar amount of your assets minus all your debts. You can calculate your net worth by subtracting your liabilities (debts) from your assets. If your assets exceed your liabilities, you will have a positive net worth. Conversely, if your liabilities are greater than your assets, you will have a negative net worth.
25, 200-16,500=+8700
what is business ? please tell us
Answers
Answer:
Noun, a person's regular occupation, profession, or trade.
Explanation:
isabella’s landlord has included a clause in the rental contract that makes it possible for him to increase isabella’s monthly rent if taxes on the property go up. which clause was included in the contract?
Answers
Answer:
Escalator clause
Explanation:
sport directs and British Heart Foundation: mission, vision, and values.
Answers
Our British goal is to create a world without the worry of cardiovascular and Foundation circulation conditions. These illnesses destroy the hearts mission of millions of families and claim the lives of 1 in 4 people.
We intend to alter that. In order to permanently defeat sadness, we raise money for research into treatments and Foundation cures. According to the BBC's Royal Charter, its purpose is to act in the public interest mission while providing all audiences with objective, outstanding, and distinctive products and services that inform, educate, and amuse them. The British Heart Foundation Society seeks to promote the charity and raise funds for it.
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Caleb will be going to college next year. He would like to save some money for living expenses. Select the goal that would be the most helpful for him.
Answers
Answer:
save 100$ each check.
Explanation:
Ginger borrowed $3,000 from the bank, and promised to pay it back in 10 years. What is her debt maturity?
A. 3 years
B. 10 years
C. 5 years
Answers
The second option, debt maturity 10 years, is the correct one.
What exactly is debt maturity?Maturity refers to the number of years remaining until the original maturity period, which is the sum of the grace and installment periods. The grace period for principal is the time between signing the loan or issuing the financial instrument and the first repayment of principal. Debt maturity structure can have financial and real-world consequences. Short-term debt, typically defined as debt maturing within a year, exposes depositors to rollover risk (when financing terms are renegotiated to the borrower's detriment) and is associated with banking meltdown.
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Lola is in the process of selecting a campaign type to suit her business objectives. Why is it important that she consider business objectives before choosing her campaign type?
Answers
Digital advertisement services will mechanically create advert messaging based on the marketing campaign kind Lola chooses. The marketing campaign kind selected will decide which advertisements seem and the layout of these advertisements.
What are Business Objectives?Business objectives provide you the ability to monitor yourself and what kind of progress you are making. They offer a vital test that maintains you from turning blinded by your bias.
Objectives additionally assist to evaluate the personnel, in addition, to allowing personnel compare themselves.
Therefore, Digital advertisement services will mechanically create advert messaging based on the marketing campaign kind Lola chooses. The marketing campaign kind selected will decide which advertisements seem and the layout of these advertisements.
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one risk reflects a range of uncertainties that life insurers face including such things as bad management decisions and guaranty fund assessments. this risk is called
Answers
The risk that reflects a range of uncertainties that life insurers face, including bad management decisions and guaranty fund assessments, is called "operational risk."
Operational risk refers to the risk of loss resulting from inadequate or failed internal processes, people, and systems or from external events. This includes a wide range of potential risks such as legal and regulatory risks, technology risks, and human error risks.
In the context of the insurance industry, operational risk can impact various areas such as claims processing, underwriting, investment management, and customer service. Insurers typically have risk management processes and controls in place to identify, assess, and mitigate operational risks to protect their policyholders and ensure financial stability.
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"Takahide Kiuchi, a researcher at Nomura Research Institute, however, said the global crisis in the semi-conductor supply chain in the second quarter caused Japanese automakers to cut production, which also crimped personal consumption and export growth... Since the spring of this year, raw material prices in the international market have risen sharply, pressuring Japan's manufacturing sector, said Hideo Kumano, chief economist at Dai-ichi Life Research Institute..." When the value of the raw materials imported and used in producing automobiles, the value of the semiconducters which form the components of the automobiles as well as the automobiles sold are added... A. GDP is underestimated B. GDP is overestimated C. GDP is being calculated using the Expenditure method D. GDP is being calculated using the Production method
Answers
The given information suggests that the value of raw materials, semiconductors, and automobiles has been affected by various factors such as the global crisis in the semiconductor
supply chain and rising raw material prices. Based on this information, we can determine the following Explanation: The reason for this is that the given factors have led to a decrease in production and consumption in the manufacturing sector, particularly in the automobile industry. When GDP is calculated using the expenditure method, which includes the value of final goods and services purchased, the decreased production and consumption would result in a lower value of GDP. However, if the actual value of raw materials, semiconductors, and automobiles is added up without accounting for the decreased production and consumption, it would overestimate the GDP. t's important to note that this is a simplified analysis based on the information provided. GDP calculation involves various factors and components, and a comprehensive assessment would require a more detailed analysis of the specific data and methodology used in calculating GDP.
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which economic indicators most strongly suggest than an economy is experiencing the expansion phase of the business cycle?
Answers
The economic indicators that most strongly suggest that an economy is experiencing the expansion phase of the business cycle are as follows: GDP Growth Rate, Employment, Consumer Confidence, Industrial Production, Investment and Capital Spending.
1. GDP Growth Rate: The growth rate of gross domestic product (GDP) is a crucial indicator of economic expansion. When the GDP is growing rapidly, it suggests that the economy is experiencing an expansion phase.
2. Employment: When an economy is in expansion, it will generate jobs, lowering unemployment rates. Therefore, falling unemployment rates indicate that the economy is growing.
3. Consumer Confidence: Consumer confidence is critical to the expansion phase of the business cycle. A rise in consumer confidence suggests that individuals believe that the economy will continue to grow.
4. Industrial Production: Industrial production also a crucial economic indicator. Industrial production growth shows that there is increased demand in the economy, meaning that it is growing.
5. Investment and Capital Spending: When businesses are investing in the economy by increasing their capital expenditure, it indicates that they believe the economy will continue to grow. When companies invest, it leads to increased job creation and economic growth.
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