Culver Corporation was a small company in the energy sector. Culver operated by purchasing natural gas from the companies that extracted it, then selling the natural gas to refineries to be processed. Because the price for natural gas fluctuated, Culver often entered into future contracts as a way of managing the risk. On May 15, 2020, Culver entered into a future contract to sell 33,000 cubic metres of natural gas at a price of $4.00 per cubic metre (which was the market value on May 15). The broker with whom Culver arranged the contract required a 18% deposit, which Culver paid in cash. On June 30, Culvers year-end, the price of natural gas was $4.65 per cubic metre. On July 1, Culver closed out the contract at the same natural gas price, settling net without delivering the gas.

(To record loss on derivative.) on June30