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Partridge Ltd Holds a Well-Diversified Portfolio of Shares with a Current

Question 31

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Partridge Ltd holds a well-diversified portfolio of shares with a current market value on 1 April 2004 of $1 million.On this date Partridge Ltd decides to hedge the portfolio by taking a sell position in fifteen SPI futures units.The All Ordinaries SPI is 3130 on 1 April 2004.A unit contract in SPI futures is priced based on All Ordinaries SPI and a price of $25.The futures broker requires a deposit of $80,000.On 30 June the All Ordinaries SPI has fallen to 2,980 and the value of the company's share portfolio has fallen to $950,000.What are the appropriate journal entries to record these events?
A.
Partridge Ltd holds a well-diversified portfolio of shares with a current market value on 1 April 2004 of $1 million.On this date Partridge Ltd decides to hedge the portfolio by taking a sell position in fifteen SPI futures units.The All Ordinaries SPI is 3130 on 1 April 2004.A unit contract in SPI futures is priced based on All Ordinaries SPI and a price of $25.The futures broker requires a deposit of $80,000.On 30 June the All Ordinaries SPI has fallen to 2,980 and the value of the company's share portfolio has fallen to $950,000.What are the appropriate journal entries to record these events? A. B. C. D. E. None of the given answers.
B.
Partridge Ltd holds a well-diversified portfolio of shares with a current market value on 1 April 2004 of $1 million.On this date Partridge Ltd decides to hedge the portfolio by taking a sell position in fifteen SPI futures units.The All Ordinaries SPI is 3130 on 1 April 2004.A unit contract in SPI futures is priced based on All Ordinaries SPI and a price of $25.The futures broker requires a deposit of $80,000.On 30 June the All Ordinaries SPI has fallen to 2,980 and the value of the company's share portfolio has fallen to $950,000.What are the appropriate journal entries to record these events? A. B. C. D. E. None of the given answers.
C.
Partridge Ltd holds a well-diversified portfolio of shares with a current market value on 1 April 2004 of $1 million.On this date Partridge Ltd decides to hedge the portfolio by taking a sell position in fifteen SPI futures units.The All Ordinaries SPI is 3130 on 1 April 2004.A unit contract in SPI futures is priced based on All Ordinaries SPI and a price of $25.The futures broker requires a deposit of $80,000.On 30 June the All Ordinaries SPI has fallen to 2,980 and the value of the company's share portfolio has fallen to $950,000.What are the appropriate journal entries to record these events? A. B. C. D. E. None of the given answers.
D.
Partridge Ltd holds a well-diversified portfolio of shares with a current market value on 1 April 2004 of $1 million.On this date Partridge Ltd decides to hedge the portfolio by taking a sell position in fifteen SPI futures units.The All Ordinaries SPI is 3130 on 1 April 2004.A unit contract in SPI futures is priced based on All Ordinaries SPI and a price of $25.The futures broker requires a deposit of $80,000.On 30 June the All Ordinaries SPI has fallen to 2,980 and the value of the company's share portfolio has fallen to $950,000.What are the appropriate journal entries to record these events? A. B. C. D. E. None of the given answers.
E. None of the given answers.

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