ate was CHF1 = $1.03 me date, Gillard acqui 1, 20X6, Gillard recei the Swiss francs in ex- 20X6 was CHF1 = $1.
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- On August 1, Ling-Harvey Corporation (a U.S.-based importer) placed an order to purchase merchandise from a foreign supplier at a price of 400,000 ringgits. Ling-Harvey will receive and make payment for the merchandise in three months on October 31. On August 1, Ling-Harvey entered into a forward contract to purchase 400,000 ringgits in three months at a forward rate of $0.60. It properly designates the forward contract as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the forward rate. Relevant exchange rates for the ringgit are as follows:Ling-Harvey’s incremental borrowing rate is 12 percent. The present value factor for one month at an annual interest rate of 12 percent (1 percent per month) is 0.9901. Ling-Harvey must close its books and prepare its third-quarter financial statements on September 30.a. Prepare journal entries for the forward contract and firm commitment through October 31.b.…On August 1, Ling-Harvey Corporation (a U.S.-based importer) placed an order to purchase merchandise from a foreign supplier at a price of 400,000 ringgits. Ling-Harvey will receive and make payment for the merchandise in three months on October 31. On August 1, Ling-Harvey entered into a forward contract to purchase 400,000 ringgits in three months at a forward rate of $0.60. It properly designates the forward contract as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the forward rate. Relevant exchange rates for the ringgit are as follows: Date Spot rate Forward rate ( to October 31) August 1 $0.60 $0.60 September30 0.63 0.66 October 31 0.68 N/A Ling-Harvey’s incremental borrowing rate is 12 percent. The present value factor for one month at an annual interest rate of 12 percent (1 percent per month) is 0.9901. Ling-Harvey must close its books and prepare its third-quarter financial…On August 1, Pure Joy Corporation (a U.S.-based Importer) placed an order to purchase merchandise from a foreign supplier at a price of 400,000 pounds. Pure Joy will receive and make payment for the merchandise in three months on October 31. On August 1, Pure Joy entered into a forward contract to purchase 400,000 pounds in three months at a forward rate of $0.60 per pound. The company properly designates the forward contract as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the forward rate and, therefore, forward points are included in assessing hedge effectiveness. Relevant U.S. dollar exchange rates for the pound are as follows: Date August 1 September 30 October 31 Spot Rate $ 0.60 0.63 0.68 Forward Rate (to October 31) $ 0.60 0.66 N/A Pure Joy must close its books and prepare its third-quarter financial statements on September 30. The merchandise is received and paid for on October 31 and sold…
- On August 1, Pure Joy Corporation (a U.S.-based importer) placed an order to purchase merchandise from a foreign supplier at a price of 400,000 pounds. Pure Joy will receive and make payment for the merchandise in three months on October 31. On August 1, Pure Joy entered into a forward contract to purchase 400,000 pounds in three months at a forward rate of $0.60 per pound. The company properly designates the forward contract as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the forward rate, and, therefore, forward points are included in assessing hedge effectiveness. Relevant U.S. dollar exchange rates for the pound are as follows: Date August 1 September 30 October 31 Spot Rate $ 0.60 0.63 0.68 Forward Rate (to October 31) $ 0.60 0.66 N/A Pure Joy must close its books and prepare its third-quarter financial statements on September 30. The merchandise is received and paid for on October 31 and…On August 1, Pure Joy Corporation (a U.S.-based importer) placed an order to purchase merchandise from a foreign supplier at a price of 400,000 pounds. Pure Joy will receive and make payment for the merchandise in three months on October 31. On August 1, Pure Joy entered into a forward contract to purchase 400,000 pounds in three months at a forward rate of $0.60 per pound. The company properly designates the forward contract as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the forward rate, and, therefore, forward points are included in assessing hedge effectiveness. Relevant U.S. dollar exchange rates for the pound are as follows: Date Spot Rate Forward Rate(to October 31) August 1 0.60 0.60 September 30 0.63 0.66 October 31 0.68 N/A Pure Joy must close its books and prepare its third-quarter financial statements on September 30. The…On August 1, Pure Joy Corporation (a U.S.-based importer) placed an order to purchase merchandise from a foreign supplier at a price of 400,000 pounds. Pure Joy will receive and make payment for the merchandise in three months on October 31. On August 1, Pure Joy entered into a forward contract to purchase 400,000 pounds in three months at a forward rate of $0.60 per pound. The company properly designates the forward contract as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the forward rate, and, therefore, forward points are included in assessing hedge effectiveness. Relevant U.S. dollar exchange rates for the pound are as follows: Date August 1 September 30 October 31 Spot Rate $ 0.60 0.63 0.68 Forward Rate (to October 31) $ 0.60 0.66 N/A Pure Joy must close its books and prepare its third-quarter financial statements on September 30. The merchandise is received and paid for on October 31 and…
- On December 1, Year 1, El Primero Company purchases inventory from a foreign supplier for 40,000 coronas. Payment will be made in 90 days after El Primero has sold this merchandise. Sales are made rather quickly, and El Primero pays this entire obligation on February 15, Year 2. The following exchange rates for 1 corona apply: Date U.S Dollar per Corona December 1, Year 1 $0.87 December 31, Year 1 $0.82 February 15, Year 2 $0.91 Required: Prepare all journal entries for El Primero in connection with the purchase and payment.On December 1, Year 1, Triaxal Incorporation enters into a forward contract to sell one million Philippines pesos (PP) to its bank in exchange for Canadian dollars on March 1, Year 2, at the market rate for a 90-day forward contract of PP1=$0.0227. On December 31, Year 1, Triaxal’s year-end, the 60-day forward rate to sell Philippines pesos on March 1 is quoted at PP1=$0.0222. On March 1, Year 2, the currencies are exchanged when the spot rate is PP1=$0.0220. Required Prepare journal entries for speculative forward contract under Gross Method and Net Method.Starflyer Inc., a Canadian public company, entered into the following transactions late in 20X6: Transaction #1: On October 15, Starflyer Inc. purchased inventory from a Mexican supplier for 800,000 pesos (Ps). On the same day, Starflyer Inc. entered into a forward contract for Ps 800,000 at the 60-day forward rate. The Mexican supplier was paid in full on December 15, 20X6. Transaction #2: On October 15, 20X6, Starflyer Inc. sold merchandise to a company in Sweden for 6,000,000 kronor. The amount was to be paid in 90 days. Starflyer Inc. hedged the receivable for the 90-day period with a forward contract. Starflyer Inc. has a year-end of December 31. Exchange rates were as follows during this period of time: October 15, 20X6 1 Kronor = 1 Kronor = $0.1078 1 Kronor = $0.1080 1 Kronor = $0.1094 I Kronor = $0.1099 I Kronor = $0.1075 I Kronor = $0.1058 Ps1 = $0.3960 $0.1250 October 15, 20X6, forward 60-day rate October 15, 20X6, forward 90-day rate Ps1 = $0.3990 Ps1 = $0.3970 December 15,…
- On November 1, 20x1, Pain Co. received a sale order for equipment from Gain Co., a foreign entity, for 300,000 foreign currency units (FCU) when the local currency unit (LCU) equivalent was 96,000 LCUs. Pain shipped the equipment on December 1, 20x1, and billed the customer for 300,000 FCUS when the local currency unit equivalent was 100,000 LCUS. On December 31, 20x1, the local currency unit equivalent of the 300,000 FCUS was 103,000LCUS. Pain received the payment on January 6, 20x2 when the local currency unit equivalent of the 300,000 FCUS was 105,000 LCUS. Requirement: Provide the journal entries in 20x1 and 20x2The following information are the import transaction between Peerless Products and Tokyo Industries: On August 1, 20X1, Peerless contracts to purchase special-order goods from Tokyo Industries. Their manufacture and delivery will take place in 60 days (on October 1, 20X1). The contract price is 2,000,000 yen.. Timing USD/YEN Hedge Commencement 0.0065 30 days later (first reporting date) 0.0075 • 60 days later (purchase takes place and the payment is made) 0.0070 Required: prepare the journal entry based on the given informationOn November 1, 20X6, Smith Imports Incorporated contracted to purchase teacups from England for £50,000. The teacups were to be delivered on January 30, 20X7, with payment due on March 1, 20X7. On November 1, 20X6, Smith entered into a 120-day forward contract to receive 50,000 pounds at a forward rate of £1 = $1.55. The forward contract was acquired to hedge the financial component of the foreign currency commitment. Additional Information for the Exchange Rate Assume the company uses the forward rate in measuring the forward exchange contract and for measuring hedge effectiveness. Spot and exchange rates follow: Date Spot Rate Forward Rate for March 1, 20X7 November 1, 20X6 £1 = $1.60 £1 = $ 1.55 December 31, 20X6 £1 = 1.63 £1 = 1.60 January 30, 20X7 £1 = 1.55 £1 = 1.56 March 1, 20X7 £1 = 1.545 Required: b. Prepare all journal entries from November 1, 20X6, through March 1, 20X7, for the purchase of the teacups, the forward exchange contract, and the foreign…
