Question 1 12 pts On July 1, 2020, Mackenzie Inc. anticipates purchasing 100,000 pounds of aluminum in April 2021 (i.e., a forecasted transaction). Mackenzie Inc. expects to process the aluminum into window frames and ultimately sell the window frames. As the window frame business is extremely competitive, Mackenzie Inc. decides to hedge the cash flow risk associated with the anticipated purchase of inventory. On July 1, 2020, the April aluminum futures price is $1.70 per pound. The local price of aluminum (spot price) where Mackenzie Inc. is located is $1.75 per pound. On July 1, 2020, Mackenzie Inc. enters into a long position with ten aluminum futures contracts (at 10,000 pounds per contract). Net cash settlement will occur. On December 31, 2020, Mackenzie Inc. prepares financial statements. At December 31, 2020, the April aluminum futures price is $1.75 per pound. The local price of aluminum (spot price) where Mackenzie Inc. is located is $1.80 per pound. Lastly, on April 15, 2021, the spot price for aluminum is $1.85 per pound where Mackenzie Inc. is located (Mackenzie Inc. will buy the aluminum at this price). The futures price for April aluminum is $1.80 per pound (this price will determine the value of the futures contract). Mackenzie Inc. purchases the aluminum as planned on April 15th. Mackenzie Inc. also settles (for cash) its derivative position on that date. Numerical Answers should be in the following format: 40.000 Mackenzie Inc. will report an unrealized holding gain of $ on December 31.2020. Theredibaldinacitete dist 201 202 bensin aluminum (spot price) where Mackenzie Inc. is located is $1.80 per pound. Lastly, on April 15, 2021, the spot price for aluminum is $1.85 per pound where Mackenzie Inc. is located (Mackenzie Inc. will buy the aluminum at this price). The futures price for April aluminum is $1.80 per pound (this price will determine the value of the futures contract). Mackenzie Inc. purchases the aluminum as planned on April 15th. Mackenzie Inc. also settles (for cash) its derivative position on that date. Numerical Answers should be in the following format: 40,000 Mackenzie Inc. will report an unrealized holding gain of $ on December 31,2020. The unrealized holding gain for the year ending December 31, 2020 will be part of Net Income. True or False Post purchase of the inventory and settlement of the futures contract on April 15th, 2021, the carrying value of the aluminum inventory will be $ When Mackenzie Inc. ultimately sells the window frames that included the aluminum purchased on April 15, 2021, the amount included in Cost of Goods Sold related to the aluminum will be $ Question 1 12 pts On July 1, 2020, Mackenzie Inc. anticipates purchasing 100,000 pounds of aluminum in April 2021 (i.e., a forecasted transaction). Mackenzie Inc. expects to process the aluminum into window frames and ultimately sell the window frames. As the window frame business is extremely competitive, Mackenzie Inc. decides to hedge the cash flow risk associated with the anticipated purchase of inventory. On July 1, 2020, the April aluminum futures price is $1.70 per pound. The local price of aluminum (spot price) where Mackenzie Inc. is located is $1.75 per pound. On July 1, 2020, Mackenzie Inc. enters into a long position with ten aluminum futures contracts (at 10,000 pounds per contract). Net cash settlement will occur. On December 31, 2020, Mackenzie Inc. prepares financial statements. At December 31, 2020, the April aluminum futures price is $1.75 per pound. The local price of aluminum (spot price) where Mackenzie Inc. is located is $1.80 per pound. Lastly, on April 15, 2021, the spot price for aluminum is $1.85 per pound where Mackenzie Inc. is located (Mackenzie Inc. will buy the aluminum at this price). The futures price for April aluminum is $1.80 per pound (this price will determine the value of the futures contract). Mackenzie Inc. purchases the aluminum as planned on April 15th. Mackenzie Inc. also settles (for cash) its derivative position on that date. Numerical Answers should be in the following format: 40.000 Mackenzie Inc. will report an unrealized holding gain of $ on December 31.2020. Theredibaldinacitete dist 201 202 bensin aluminum (spot price) where Mackenzie Inc. is located is $1.80 per pound. Lastly, on April 15, 2021, the spot price for aluminum is $1.85 per pound where Mackenzie Inc. is located (Mackenzie Inc. will buy the aluminum at this price). The futures price for April aluminum is $1.80 per pound (this price will determine the value of the futures contract). Mackenzie Inc. purchases the aluminum as planned on April 15th. Mackenzie Inc. also settles (for cash) its derivative position on that date. Numerical Answers should be in the following format: 40,000 Mackenzie Inc. will report an unrealized holding gain of $ on December 31,2020. The unrealized holding gain for the year ending December 31, 2020 will be part of Net Income. True or False Post purchase of the inventory and settlement of the futures contract on April 15th, 2021, the carrying value of the aluminum inventory will be $ When Mackenzie Inc. ultimately sells the window frames that included the aluminum purchased on April 15, 2021, the amount included in Cost of Goods Sold related to the aluminum will be $
