During the second quarter of 20X5, Bertke Company entered into a futures contract that calls for the sale of 2,500 tons of soybean meal in July at a future price of $13.26 per ton.Bertke Company designated the contract as a hedge on a forecasted sale of soybean meal.The changed in the time value of the futures contract is excluded from the assessment of hedge effectiveness.The information regarding the contract and soybean meal is as follows:
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$$\begin{array} { l r r r r }
& \text { April } 1 & \text { April 30 } & \text { May 31 } & \text { June 30 } \
\text { Spot price per ton } & \$ 13.21 & \$ 13.18 & \$ 13.14 & \$ 13.10 \
\text { Futures price per ton } & 13.16 & 13.12 & 13.11 & 13.05
\end{array}$$ Required:
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Prepare a schedule to show the effect of this hedge on current earnings of Bertke Company.

Question

During the second quarter of 20X5, Bertke Company entered into a futures contract that calls for the sale of 2,500 tons of soybean meal in July at a future price of $13.26 per ton.Bertke Company designated the contract as a hedge on a forecasted sale of soybean meal.The changed in the time value of the futures contract is excluded from the assessment of hedge effectiveness.The information regarding the contract and soybean meal is as follows:
?
?
 $$\begin{array} { l r r r r } 
& \text { April } 1 & \text { April 30 } & \text { May 31 } & \text { June 30 } \
\text { Spot price per ton } & \$ 13.21 & \$ 13.18 & \$ 13.14 & \$ 13.10 \
\text { Futures price per ton } & 13.16 & 13.12 & 13.11 & 13.05
\end{array}$$ Required:
?
Prepare a schedule to show the effect of this hedge on current earnings of Bertke Company.

Quizplus · Accepted Answer

The Answer of During the second quarter of 20X5, Bertke Company entered into a futures contract that calls for the sale of 2,500 tons of soybean meal in July at a future price of $13.26 per ton.Bertke Company designated the contract as a hedge on a forecasted sale of soybean meal.The changed in the time value of the futures contract is excluded from the assessment of hedge effectiveness.The information regarding the contract and soybean meal is as follows:
?
?
 $$\begin{array} { l r r r r } 
& \text { April } 1 & \text { April 30 } & \text { May 31 } & \text { June 30 } \
\text { Spot price per ton } & \$ 13.21 & \$ 13.18 & \$ 13.14 & \$ 13.10 \
\text { Futures price per ton } & 13.16 & 13.12 & 13.11 & 13.05
\end{array}$$ Required:
?
Prepare a schedule to show the effect of this hedge on current earnings of Bertke Company.

During the Second Quarter of 20X5, Bertke Company Entered into a Futures