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Hi,
This may seem like a silly question but I am looking at a question and having to prepare just the SOFP.
In regards to a futures contract, I need to do the following
DR Derivatives $900,000 (Do I make a new entry on the SOFP for Futures Contract for $900,000?)
CR Profit & Loss $900,000 (Does the adjustment go to Retained Earnings)?
Thank you
KirstyThank you for your response, I am still confused.
This is the question
01 Oct 05, company enters into futures contract to sell 10,000 units of inventory for £5m, no consideration paid. By reporting date of 31 Dec 05 , futures contract risen to £1.1m and FV of inventory had fallen by £0.9m.There is no entry on the SOFP for derivatives yet.
So do I create a derivative entry and do the following :
DR Derivative 1.1m
CR P&L. 1.1m
DR P&L 0.9m
CR Inventory 0.9mWhat do I do with the 0.2m diff to make sure the SOFP balances ?
Thank you
Kirsty
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