Chrysler Exporters Inc., a US wholesaler is engaged in foreign trade. The following transactions were recorded: On December 1, 2020, Chrysler Exporters Inc., purchased merchandise from Chang's Ltd a I. Japanese manufacturer. The invoice was for ¥500,000, payable on April 1, 2021. On the same day, Chrysler Exporters Inc. accepted a forward exchange contract (forward contract) to buy ¥500,000 on April 1, 2021. I. 2
Chrysler Exporters Inc., a US wholesaler is engaged in foreign trade. The following transactions were recorded: On December 1, 2020, Chrysler Exporters Inc., purchased merchandise from Chang's Ltd a I. Japanese manufacturer. The invoice was for ¥500,000, payable on April 1, 2021. On the same day, Chrysler Exporters Inc. accepted a forward exchange contract (forward contract) to buy ¥500,000 on April 1, 2021. I. 2
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
- Prepare the
journal entries to track the accounts payable and the forward contract on December 31, 2020, for Chrysler Exporters Inc. financial statements. - Prepare the journal entries for the settlement of the contracts on April 1, 2021.
- What is the value of the forward contract?
![Question 3
Chrysler Exporters Inc., a US wholesaler is engaged in foreign trade. The following transactions
were recorded:
On December 1, 2020, Chrysler Exporters Inc., purchased merchandise from Chang's Ltd a
I.
Japanese manufacturer. The invoice was for ¥500,000, payable on April 1, 2021.
On the same day, Chrysler Exporters Inc. accepted a forward exchange contract (forward
II.
contract) to buy ¥500,000 on April 1, 2021.
On April 1, 2021, the ¥500,000 was delivered on the contract and the supplier was settled.
The spot rates and the forward rates were as follows:
III.
IV.
Date
Spot rate
Forward rate
for delivery (¥) on April 1, 2021
December 1, 2020
$0.0084
$0.0089
December 31, 2020
0.0083
0.0088
April 1, 2021
0.0092](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F486c3acc-a624-4f32-a451-67c53e2f625c%2F6658ac10-a289-46ea-a836-018995c21dc7%2Fqnamytpm_processed.png&w=3840&q=75)
Transcribed Image Text:Question 3
Chrysler Exporters Inc., a US wholesaler is engaged in foreign trade. The following transactions
were recorded:
On December 1, 2020, Chrysler Exporters Inc., purchased merchandise from Chang's Ltd a
I.
Japanese manufacturer. The invoice was for ¥500,000, payable on April 1, 2021.
On the same day, Chrysler Exporters Inc. accepted a forward exchange contract (forward
II.
contract) to buy ¥500,000 on April 1, 2021.
On April 1, 2021, the ¥500,000 was delivered on the contract and the supplier was settled.
The spot rates and the forward rates were as follows:
III.
IV.
Date
Spot rate
Forward rate
for delivery (¥) on April 1, 2021
December 1, 2020
$0.0084
$0.0089
December 31, 2020
0.0083
0.0088
April 1, 2021
0.0092
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