Bullion market
This query is : Resolved
30 April 2010
Hi all,
One of my client is trading in bullions i.e. gold. Below mentioned is his business flow.
He generally buys gold on MCX (commodity exchange). So he books gold on say 1st of each month and MCX gives delivery on expiry of contract. Now on same day he sells gold for future date with some price margin say 20-30 Rs per 10 grams. Example is he book gold @ 18000 per 10 gms on 01.05.2010 and will take delivery on 31.05.2010 on same day he sells to Mr X at 18050 per 10 grams and he will give delivery on 31.05.2010. This is how he makes profit.
The question is what to do at the time of expiry if price is 19000 per 10 gms and he receives invoice for 19000 per 10 gms. So he makes losses/profits on book which he has not incurred and how to settle account of MCX?
Thank you in advance
One of my client is trading in bullions i.e. gold. Below mentioned is his business flow.
He generally buys gold on MCX (commodity exchange). So he books gold on say 1st of each month and MCX gives delivery on expiry of contract. Now on same day he sells gold for future date with some price margin say 20-30 Rs per 10 grams. Example is he book gold @ 18000 per 10 gms on 01.05.2010 and will take delivery on 31.05.2010 on same day he sells to Mr X at 18050 per 10 grams and he will give delivery on 31.05.2010. This is how he makes profit.
The question is what to do at the time of expiry if price is 19000 per 10 gms and he receives invoice for 19000 per 10 gms. So he makes losses/profits on book which he has not incurred and how to settle account of MCX?
Thank you in advance
CA Ashok Kumar Sahu
(Expert)
01 May 2010
AS PER MY VIEW:
ENTRY OF PURCHASE
BULLIONS A/C DR 18000
TO BANK 18000
ENTRY OF SALE
BANK A/C DR 18050
TO BULLIONS A/C 18000
TO PROFIT A/C 50
YOU CAN EARN NET PROFIT OF RS. 50 PER 10 GRAM
ENTRY OF PURCHASE
BULLIONS A/C DR 18000
TO BANK 18000
ENTRY OF SALE
BANK A/C DR 18050
TO BULLIONS A/C 18000
TO PROFIT A/C 50
YOU CAN EARN NET PROFIT OF RS. 50 PER 10 GRAM
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