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FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Accounting a) On January 1, 2022, Dymaxium Inc. a Canadian company, sold Alberta beef to a foreign company for FC$200,000, with payment due on March 1, 2008. ON the same date, Dymaxium entered into a forward contract with the bank to sell the foreign currency (FC) it will receive on March 1, 2022 at a rate of FC1=C$1.16. The forward contract was designed as a fair value hedge of the FC receivable. On March 1, 2022, Dymaxium received the payment from the foreign company and settled the forward contract with the bank. Spot exchange rates were as follows: January 1, 2022 FC1 = C$1.18 March 1, 2022 FC1 = C$1.19 Required Prepare journal entries to record the above transactions 1
Transcribed Image Text:Accounting a) On January 1, 2022, Dymaxium Inc. a Canadian company, sold Alberta beef to a foreign company for FC$200,000, with payment due on March 1, 2008. ON the same date, Dymaxium entered into a forward contract with the bank to sell the foreign currency (FC) it will receive on March 1, 2022 at a rate of FC1=C$1.16. The forward contract was designed as a fair value hedge of the FC receivable. On March 1, 2022, Dymaxium received the payment from the foreign company and settled the forward contract with the bank. Spot exchange rates were as follows: January 1, 2022 FC1 = C$1.18 March 1, 2022 FC1 = C$1.19 Required Prepare journal entries to record the above transactions 1
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