The Davis Company grows soybeans and processes them into soybean meal for eventual sale to food companies. Davis currently owns 10,000 tons of soybean meal, carried in their inventory at a cost of $3,400,000. Soybean meal trades on the spot markets for $350 per ton; three-month futures are selling for $363 per ton. Davis expects to sell the 10,000 tons for 90 days. On August 1, 2017, Davis sells 10,000 tons of soybean meal futures to be delivered on October 30, 2017, at the $363 price. The price of Davis futures contracts has advanced to $367 and the spot price is $354 on September 30, when the books are closed for interim reporting purposes. Davis closes out its short position on October 28, 2017, when the future price is $361 per ton and the spot price is $348.

Required (evaluate each separately):

3. Suppose instead that Davis purchased the 10,000 tons of soybean futures on August 1, 2017, closing the long position on October 28, 2017. Calculate the net cash gain or loss on the long futures position and compare its accounting treatment with the gain or loss on the short futures position in number 1 above at October 28, 2017