Question
On October 5, 2020, Klarke Cloth Ltd. enters into a forward contract to purchase 10,000 metres of cotton fabric at $1 per metre, good until
On October 5, 2020, Klarke Cloth Ltd. enters into a forward contract to purchase 10,000 metres of cotton fabric at $1 per metre, good until February 1, 2021. At December 31, 2020, the forward price for February 2021 delivery of cotton fabric has increased to $1.06 per metre. The adjusting entry at December 31, 2020 would be
| a) | DR Gain or Loss on Derivatives | 600 |
|
|
| CR Derivatives - Financial Assets/Liabilities |
| 600 |
| b) | DR Derivatives - Financial Assets/Liabilities | 600 |
|
|
| CR Gain or Loss on Derivatives |
| 600 |
| c) | No entry required |
|
|
| d) | DR Derivatives - Financial Assets/Liabilities | 600 |
|
|
| CR Unrealized Gain or Loss (OCI) |
| 600 |
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College Accounting, Chapters 1-15
Authors: James A. Heintz, Robert W. Parry
21st Edition
1285639723, 9781285639727
