Jenson Company buys 20 contracts on the Chicago Board of Trade to receive October delivery of soybeans to a certified warehouse. Each contract is in units of 3,000 bushels at a futures price of $2.75 per bushel. The owner of the contract requires a margin account with an initial margin of $8,000, with a maintenance margin of $6,000. What entry will Jenson Company make to establish the margin account?

Question

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The Answer is C
An $8,000 payment will be made to establish the margin account, upon which Cash will be credited and a debit will be made to Futures contract - margin account.

Jenson Company Buys 20 Contracts on the Chicago Board of Trade