Blossom Exporting Co. is a U.S. wholesaler engaged in foreign trade. The following transactions are representative of its business de The company uses a periodic inventory system and is on a calendar-year basis. All exchange rates are direct quotations. Dec. 1 Dec. 29 Blossom Exporting purchased merchandise from Chang's Ltd., a Hong Kong manufacturer. The invoice was for 260,00 Hong Kong dollars, payable on April 1. On this same date, Blossom Exporting acquired a forward contract to buy 260,0 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 hedg was involved. April 1 Blossom Exporting received 190,000 Hong Kong dollars from Zintel Retailers.
Blossom Exporting Co. is a U.S. wholesaler engaged in foreign trade. The following transactions are representative of its business de The company uses a periodic inventory system and is on a calendar-year basis. All exchange rates are direct quotations. Dec. 1 Dec. 29 Blossom Exporting purchased merchandise from Chang's Ltd., a Hong Kong manufacturer. The invoice was for 260,00 Hong Kong dollars, payable on April 1. On this same date, Blossom Exporting acquired a forward contract to buy 260,0 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 hedg was involved. April 1 Blossom Exporting received 190,000 Hong Kong dollars from Zintel Retailers.
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.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8b3d57a9-b742-4844-8c4e-13137eb2a263%2Ff744e19b-c84e-4276-96df-78c69a8f5639%2Fj40b24l_processed.png&w=3840&q=75)
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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