Valix Finacc vol 1 Problem 14-11

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 14-11

   2008

Dec. 31   Forward contract receivable                                               893,000

                      Unrealized gain – forward contract (1,000,000 x .893)                           893,000

   2009

Dec. 31   Unrealized gain – forward contract                                     893,000

                      Forward contract receivable                                                                893,000

               Cancelation of the forward contract receivable because 

               of the reduction of market price on December 31, 2009

   and January 1, 2010.           

          31   Unrealized loss – forward contract                                     500,000

                      Forward contract payable (100,000 x 5)                                                500,000

   2010

Jan.    1   Fish inventory (100,000 x 75)                                                7,500,000  

                      Cash                                                                                                    7,500,000

            1   Forward contract payable                                                 500,000

                      Cash                                                                                                      500,000

            1   Loss on forward contract                                                   500,000

                      Unrealized loss – forward contract                                                        500,000