Problemon march 1 the price of oil is 20 and the july, Ask an Expert

Accounting

Problem:

On March 1 the price of oil is $20 and the July futures price is $19. On June 1 the price of oil is $24 and the July futures price is $23.50. A company entered into a futures contracts on March 1 to hedge the purchase of oil June 1. It closed out its position on June 1.

Required:

Question: What is the effective price paid by the company for the oil?

Note: Explain all calculation and formulas.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91169797

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