"Today's settlement price on a Chicago Mercantile Exchange (CME) yen futures contract is $0.8011/¥100. Your margin account curre
ntly has a balance of $2,000. The next three days' settlement prices are $0.8057/¥100, $0.7996/¥100, and $0.7985/¥100. (The contractual size of one CME yen contract is ¥12,500,000). If you have a short position in one futures contract, the changes in the margin account from daily marking-to-market will result in the balance of the margin account after the third day to be A. $2,325. B. $2,000. C. $3,425. D. $1,425."
1 answer:
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Answer:
See the errors identified below.
Explanation:
Note: The data in this question are merged together. They are therefore sorted before answering the question. See the attached pdf file for the complete question with the sorted data.
The explanation of the answer is now given as follows:
The following errors can be identified in the accountant's adjusting entries:
1.The accountant debited the account receivable for $5,000 (i.e. $23,250 - $18,250 = $5,000) without crediting laundry revenue.
Therefore, we should have:
Correct amount of laundry revenue = Laundry revenue in trial balance + (Adjusted account receivable - Unadjusted account receivable) = $182,100 + ($23,250 - $18,250) = $187100
2. The accountant debited laundry suppliers expense instead of crediting laundry suppliers for $3,000.
3. The the accountant credited Prepaid insurance for $3,600 (i.e. $5,200 - $1,600 = $3,600). However, the insurance expense was debited for $600.
4. Instead of crediting accumulated depreciation, the laundry equipment for depreciation expense was erroneously credited by the accountant for $13,000.
5. A debit of $1,000 to wages expense was not made by the accountant.
<u>Additional Note:</u>
After correcting the errors identified above, the correct adjusted trial balance will look as the one in the attached photo.
