Question

As of January 2019, Cox Corp. anticipates purchasing 100,000 pounds of copper in April 2019. On January 1, 2019, Cox enters into a copper futures contract. Terms of the contract were as follows: Contract size: 100,000 pounds of copper Delivery price: $2.60 per pound Expiration: April 1, 2019 Spot prices for copper (per pound) over the contract period were the following: January 1, 2019 March 31,2019 Spot_ price $2.60 $2.80 On April 1, 2019, Cox Corp. purchased the needed 100,000 pounds of copper at the market price of $2.80 per pound. Cox also settled the futures contract on this date. In May 2019, Cox Corp. completed manufacturing of its finished product (kitchen cookware). The total cost of the cookware (including the copper purchased in April 2019) was $336,000. Cox Corp. sold the cookware on May 15, 2019 for $392,000 cash. Required: 1. Prepare the appropriate journal entry or entries related to transactions occurring in January 2019 through March 2019. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 2. Indicate any amounts that Cox Corp. would have included in its March 2019 quarterly balance sheet related to the futures contract. 3. Prepare the appropriate journal entry or entries related to transactions occurring in April 2019 throughMay 2019、ff no entry is

Answer 1

Date	Event
01-Jan-19	Cox Crop's Decision to enter into future Contracts.
Journal Entry : "No Journal Entry Required".
Date	Event
31-Mar-19	Change in Value of the future contract
	Ledger	Debit	Credit
	Future Contracts	$          20,000
	Unrealised gain on Future Contract		$            20,000
	($ 2.8- $2.6)*100000
Amounts that Cox Crop's would have included in Mar-19 Balance sheet would be $ 20000
Calculation as below :
	($ 2.8- $2.6)*100000
Date	Event
01-Apr-19	Record for Purchase of Copper Inventory
	Ledger	Debit	Credit
	Inventory Account	$        280,000
	Cash Account		$          280,000
Date	Event
01-Apr-19	Record for Settlement of Future Contract
	Ledger	Debit	Credit
	Cash Account	$          20,000
	Future Contracts		$            20,000
Date	Event
15-May-19	Record for Sales of Completed Products
	Ledger	Debit	Credit
	Cash Account	$        392,000
	Sales Account		$          392,000
Date	Event
15-May-19	Record for Cost of Inventory Sold
	Ledger	Debit	Credit
	Cost of Production	$        336,000
	Inventory Account		$          280,000
	Accounts Payable		$            56,000
Date	Event
15-May-19	Other Re-classification Entries relating to future contracts
	Ledger	Debit	Credit
	Unrealised gain on Future Contract	$          20,000
	Gain of Future Contracts		$            20,000