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Blossom Exporting Co. is a U.S. wholesaler engaged in foreign trade. The following transactions are representative of its business dealings The company uses a periodic inventory system and is on a calendar-year basis. All exchange rates are direct quotations. Dec. 1 Dec. 29 April 1 April 1 Blossom Exporting purchased merchandise from Chang's Ltd., a Hong Kong manufacturer. The invoice was for 260,000 Hong Kong dollars, payable on April 1. On this same date, Blossom Exporting acquired a forward contract to buy 260,000 Hong Kong dollars on April 1 for $0.1314. Blossom Exporting sold merchandise to Zintel Retailers for 190,000 Hong Kong dollars, receivable in 90 days. No hedging was involved. Blossom Exporting received 190,000 Hong Kong dollars from Zintel Retailers. Blossom Exporting submitted full payment of 260,000 Hong Kong dollars to Chang's, Ltd., after obtaining the 260,000 Hong Kong dollars on its forward contract. Spot rates and the forward rates for the Hong Kong dollar were as follows: Spot Rate Forward Rate for April 1 Delivery Dec. 1 $0.1265 $0.1314 Dec. 29 0.1240 0.1305 Dec. 31 0.1259 0.1308 April 1 0.1430

Blossom Exporting Co. is a U.S. wholesaler engaged in foreign trade. The following transactions are representative of its business dealings The company uses a periodic inventory system and is on a calendar-year basis. All exchange rates are direct quotations. Dec. 1 Dec. 29 April 1 April 1 Blossom Exporting purchased merchandise from Chang's Ltd., a Hong Kong manufacturer. The invoice was for 260,000 Hong Kong dollars, payable on April 1. On this same date, Blossom Exporting acquired a forward contract to buy 260,000 Hong Kong dollars on April 1 for $0.1314. Blossom Exporting sold merchandise to Zintel Retailers for 190,000 Hong Kong dollars, receivable in 90 days. No hedging was involved. Blossom Exporting received 190,000 Hong Kong dollars from Zintel Retailers. Blossom Exporting submitted full payment of 260,000 Hong Kong dollars to Chang's, Ltd., after obtaining the 260,000 Hong Kong dollars on its forward contract. Spot rates and the forward rates for the Hong Kong dollar were as follows: Spot Rate Forward Rate for April 1 Delivery Dec. 1 $0.1265 $0.1314 Dec. 29 0.1240 0.1305 Dec. 31 0.1259 0.1308 April 1 0.1430

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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Blossom Exporting Co. is a U.S. wholesaler engaged in foreign trade. The following transactions are representative of its business dealings. The company uses a periodic inventory system and is on a calendar-year basis. All exchange rates are direct quotations. Dec. 1 Dec. 29 April 1 April 1 Blossom Exporting purchased merchandise from Chang's Ltd., a Hong Kong manufacturer. The invoice was for 260,000 Hong Kong dollars, payable on April 1. On this same date, Blossom Exporting acquired a forward contract to buy 260,000 Hong Kong dollars on April 1 for $0.1314. Blossom Exporting sold merchandise to Zintel Retailers for 190,000 Hong Kong dollars, receivable in 90 days. No hedging was involved. Blossom Exporting received 190,000 Hong Kong dollars from Zintel Retailers. Blossom Exporting submitted full payment of 260,000 Hong Kong dollars to Chang's, Ltd., after obtaining the 260,000 Hong Kong dollars on its forward contract. Spot rates and the forward rates for the Hong Kong dollar were as follows: Forward Rate for April 1 Delivery Spot Rate Dec. 1 $0.1265 $0.1314 Dec. 29 0.1240 0.1305 Dec. 31 0.1259 0.1308 April 1 0.1430 (a) Prepare journal entries for the transactions including the necessary adjustments on December 31. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O SUPPOR amounts. List all debit entries before credit entries.)
Transcribed Image Text:Blossom Exporting Co. is a U.S. wholesaler engaged in foreign trade. The following transactions are representative of its business dealings. The company uses a periodic inventory system and is on a calendar-year basis. All exchange rates are direct quotations. Dec. 1 Dec. 29 April 1 April 1 Blossom Exporting purchased merchandise from Chang's Ltd., a Hong Kong manufacturer. The invoice was for 260,000 Hong Kong dollars, payable on April 1. On this same date, Blossom Exporting acquired a forward contract to buy 260,000 Hong Kong dollars on April 1 for $0.1314. Blossom Exporting sold merchandise to Zintel Retailers for 190,000 Hong Kong dollars, receivable in 90 days. No hedging was involved. Blossom Exporting received 190,000 Hong Kong dollars from Zintel Retailers. Blossom Exporting submitted full payment of 260,000 Hong Kong dollars to Chang's, Ltd., after obtaining the 260,000 Hong Kong dollars on its forward contract. Spot rates and the forward rates for the Hong Kong dollar were as follows: Forward Rate for April 1 Delivery Spot Rate Dec. 1 $0.1265 $0.1314 Dec. 29 0.1240 0.1305 Dec. 31 0.1259 0.1308 April 1 0.1430 (a) Prepare journal entries for the transactions including the necessary adjustments on December 31. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O SUPPOR amounts. List all debit entries before credit entries.)
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