Early August Maker USA anticipated the purchase of inventory around October 2020 from a foreign company at a cost of 1,000,000 foreign currency units (FCU). On 8/10/2020, Maker paid $12,000 to purchase a call option to buy 1 million FCU at a strike price of $0.255 expiring end of year. On October 15, 2020, the option was settled and inventory purchased and paid.   08/10/2020 08/31/2020 09/30/2020 10/15/2020 Spot Rate $0.253 $0.310 $0.362 $0.275 FV of Option $12,000 $13,500 $10,000   Required: Prepare the entries on the dates listed (Maker prepared monthly financial statements).

Esposito is an Italian subsidiary of a U.S. company. Esposito’s ending inventory is valued at the average cost for the last quarter of the year. The following account balances are available for Esposito for 2021:         Beginning inventory € 20,000 Purchases € 400,000 Ending inventory € 15,000     Relevant exchange rates follow:   4th quarter average, 2020 $ 0.93 = € 1 December 31, 2020   0.94 = € 1 Average for 2021   0.96 = € 1 4th quarter average, 2021   0.99 = € 1 December 31, 2021   1.01 = € 1   Compute the cost of goods sold for 2021 in U.S. dollars using the temporal method.

RXN's year-end is on December 31. On November 1, 2019 when the U.S. dollar was worth CDNS1.365, RXN sold merchandise to an American client for US$300,000. Full payment of this invoice was expected by March 1, 2020. On December 1, the spot rate was CDNS1.3450 and the three-month forward rate was CDNS1.3250. In order to minimize its Foreign Exchange risk and exposure, RXN entered into a forward contract with its bank on December 1, 2019 to deliver US$300,000 in three months' time. The spot rate at year-end was CDNS1.36 and the forward rate from December 31, 2019 to March 1, 2020 was CDN$1.34. On March 1, 2020, RXN received the USS300,000 from its client and settled its contract with the bank. The forward contract was to be accounted for as a fair value hedge of the US dollar receivable. Significant dates and exchange rates pertaining to this transaction are as follows: Spot Rates Forward Rates November 1, 2019 (Transaction date) US$1 = CDN$1.365 December 1, 2019 (Hedged date) December…

Do not give solution in image

Based on past experience, Maas Corp. (a U.S.-based company) expects to purchase raw materials from a foreign supplier at a cost of 1,100,000 francs on March 15, 2021. To hedge this forecasted transaction, on December 15, 2020, the company acquires a call option to purchase 1,100,000 francs in three months. Maas selects a strike price of $0.70 per franc when the spot rate is $0.70 and pays a premium of $0.002 per franc. The spot rate increases to $0.706 at December 31, 2020, causing the fair value of the option to increase to $8,500. By March 15, 2021, when the raw materials are purchased, the spot rate has climbed to $0.72, resulting in a fair value for the option of $22,000. The raw materials are used in assembling finished products, which are sold by December 31, 2021, when Maas prepares its annual financial statements. a. Prepare all journal entries for the option hedge of a forecasted transaction and for the purchase of raw materials. b. What is the overall impact on net income…

Based on past experience, Maas Corp. (a U.S. -based company) expects to purchase raw materials from a foreign supplier at a cost of 1,000,000 francs on March 15, 2021. To hedge this forecasted transaction, on December 15, 2020, the company acquires a call option to purchase 1,000,000 francs in three months. Maas selects a strike price of $0.59 per franc when the spot rate is $0.59 and pays a premium of $0.001 per franc. The spot rate increases to $0.598 at December 31, 2020, causing the fair value of the option to increase to $8,500. By March 15, 2021, when the raw materials are purchased, the spot rate has climbed to $0.60, resulting in a fair value for the option of $10,000. The raw materials are used in assembling finished products, which are sold by December 31, 2021, when Maas prepares its annual financial statements. Prepare all journal entries for the option hedge of a forecasted transaction and for the purchase of raw materials. What is the overall impact on net income over the…

Based on past experience, Maas Corp. (a U.S.-based company) expects to purchase raw materials from a foreign supplier at a cost of 1,200,000 francs on March 15, 2021. To hedge this forecasted transaction, on December 15, 2020, the company acquires a call option to purchase 1,200,000 francs in three months. Maas selects a strike price of $0.82 per franc when the spot rate is $0.82 and pays a premium of $0.001 per franc. The spot rate increases to $0.827 at December 31, 2020, causing the fair value of the option to increase to $9,000. By March 15, 2021, when the raw materials are purchased, the spot rate has climbed to $0.84, resulting in a fair value for the option of $24,000. The raw materials are used in assembling finished products, which are sold by December 31, 2021, when Maas prepares its annual financial statements.   Prepare all journal entries for the option hedge of a forecasted transaction and for the purchase of raw materials. What is the overall impact on net income…

Based on past experience, Maas Corp. (a U.S.-based company) expects to purchase raw materials from a foreign supplier at a cost of 2,000,000 francs on March 15, 2021. To hedge this forecasted transaction, on December 15, 2020, the company acquires a call option to purchase 2,000,000 francs in three months. Maas selects a strike price of $0.79 per franc when the spot rate is $0.79 and pays a premium of $0.003 per franc. The spot rate increases to $0.794 at December 31, 2020, causing the fair value of the option to increase to $13,000. By March 15, 2021, when the raw materials are purchased, the spot rate has climbed to $0.81, resulting in a fair value for the option of $40,000. The raw materials are used in assembling finished products, which are sold by December 31, 2021, when Maas prepares its annual financial statements. a. Prepare all journal entries for the option hedge of a forecasted transaction and for the purchase of raw materials. b. What is the overall impact on net income…

Based on past experience, Maas Corp. (a U.S.-based company) expects to purchase raw materials from a foreign supplier at a cost of 2,000,000 francs on March 15, 2021. To hedge this forecasted transaction, on December 15, 2020, the company acquires a call option to purchase 2,000,000 francs in three months. Maas selects a strike price of $0.79 per franc when the spot rate is $0.79 and pays a premium of $0.003 per franc. The spot rate increases to $0.794 at December 31, 2020, causing the fair value of the option to increase to $13,000. By March 15, 2021, when the raw materials are purchased, the spot rate has climbed to $0.81, resulting in a fair value for the option of $40,000. The raw materials are used in assembling finished products, which are sold by December 31, 2021, when Maas prepares its annual financial statements.   Prepare all journal entries for the option hedge of a forecasted transaction and for the purchase of raw materials.

Haresh