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Stock Futures – Journal Questions

Journal Questions

Short Futures—Trade Currency AUD, Functional Currency USD

For the following scenario, prepare journal entries, general ledgers, trial balance, income statement, and balance sheet.
XYZ Fund had the following trades in ABB in the futures market. The stock exchange requires that a margin of 20 percent of the value of the contract be maintained throughout the life of the contract.

Date                Product Expiry        Quantity           Rate (AUD)          B/S        Brokerage
22-Feb-07        25-Apr-07            –1,700                45                      S             320
18-Mar-07        25-Apr-07            –1,400                50                      S             350
13-Apr-07        25-Apr-07              2,000                43                      B             400
25-Apr-07        25-Apr-07              1,100                42                   Expiry 
 

Date               FX Rate
22-Feb-07     1.18182
28-Feb-07     1.17762
15-Mar-07     1.18322
31-Mar-07     1.17521
10-Apr-07     1.18231
25-Apr-07     1.17425

Date              Market Price
22-Feb-07        47
28-Feb-07        55
31-Mar-07        43
25-Apr-07        45

Long Futures—Trade Currency SGD, Functional Currency USD

For the following scenario, prepare journal entries, general ledgers, trial balance, income statement, and balance sheet.
AA Fund had the following trades in ABC in the futures market. The stock exchange requires that a margin of 10 percent of the value of the contract be maintained throughout the life of the contract.

Date               Product Expiry          Quantity          Rate (SGD)      B/S         Brokerage
25-Aug-07      25-Nov-07             10,000              52.5              B               5,300
18-Oct-07       25-Nov-07             15,000              51.0              B               5,200
10-Nov-07      25-Nov-07           –16,000              54.0               S               3,000
25-Nov-07      25-Nov-07             –9,000              53.0               Expiry 

Date                     FX Rate
25-Aug-07          1.5389
31-Aug-07          1.5432
30-Sep-07           1.5535
18-Oct-07           1.5375
31-Oct-07           1.5296
10-Nov-07           1.5431
25-Nov-07           1.5159

Date                   Market Price
31-Aug-07              49
30-Sep-07               47
31-Oct-07               53
25-Nov-07              57
 
Long Futures—Trade Currency JPY, Functional Currency USD

For the following scenario, prepare journal entries, general ledgers, trial balance, income statement, and balance sheet.
AA Fund had the following trades in ABC in the futures market. The stock exchange requires that a margin of 30 percent of the value of the contract be maintained throughout the life of the contract.

Date                Product Expiry         Quantity          Rate (JPY)         B/S           Brokerage
29-Jan-07        25-Apr-07               1,000             800                  B                530
15-Mar-07       25-Apr-07               1,500             820                  B                520
10-Apr-07       25-Apr-07              –1,600            845                   S               300
25-Apr-07       25-Apr-07                 –900            850                   Expiry 

Date                 FX Rrate
1-Jan-07          123.805
29-Jan-07        124.850
31-Jan-07        125.705
28-Feb-07       124.805
15-Mar-07       125.705
31-Mar-07       125.205
10-Apr-07       124.235
25-Apr-07       124.569

Date                Market Price
31-Jan-07         750
28-Feb-07        770
31-Mar-07        855
25-Apr-07        857
 
Short Futures—Functional Currency USD

For the following scenario, prepare journal entries, general ledgers, trial balance, income statement, and balance sheet.
ABC Fund had the following trades in IBM in the futures market. The stock exchange requires that a margin of 15 percent of the value of the contract be maintained throughout the life of the contract.

Date                 Product Expiry          Qty            Rate (USD)        B/S        Brokerage
22-Feb-07        25-Apr-07            –1,500            45                   S              320
18-Mar-07        25-Apr-07            –1,800            50                   S              350
13-Apr-07        25-Apr-07              2,000            43                   B              400
25-Apr-07        25-Apr-07              1,300            42                   Expiry 
 
Date              Market Price
22-Feb-07          47
28-Feb-07          55
31-Mar-07          43
25-Apr-07          45

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