Stern Fitness Enterprises uses soybeans to make one of their nutritional supplement products.Stern anticipates a need of 700,000 pounds of soybeans in January of 2015.On November 1,2014,Stern purchased a call option for 700,000 pounds of soybeans on January 1,2015,at a price of $0.40 per pound,which is the market price on November 1.Stern paid $1,300 for the call option and designated this option as a hedge against price fluctuations for their January purchase of soybeans.On December 31,2014,and January 1,2015,the prevailing market price for soybeans is $0.45 per pound.On January 1,2015,Stern purchased 700,000 pounds of soybeans.
Make the necessary entries on Stern's books at
(a)November 1,2014
(b)December 31,2014
(c)January 1,2015

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The Answer of Stern Fitness Enterprises uses soybeans to make one of their nutritional supplement products.Stern anticipates a need of 700,000 pounds of soybeans in January of 2015.On November 1,2014,Stern purchased a call option for 700,000 pounds of soybeans on January 1,2015,at a price of $0.40 per pound,which is the market price on November 1.Stern paid $1,300 for the call option and designated this option as a hedge against price fluctuations for their January purchase of soybeans.On December 31,2014,and January 1,2015,the prevailing market price for soybeans is $0.45 per pound.On January 1,2015,Stern purchased 700,000 pounds of soybeans.
Make the necessary entries on Stern's books at
(a)November 1,2014
(b)December 31,2014
(c)January 1,2015

Stern Fitness Enterprises Uses Soybeans to Make One of Their