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Hedging Exposed Liability Position with Adjusting Entries On December 1, 2017, Sizzler Foods, a U.S. company. purchased merchandise from a Hong Kong supplier at a price of HK$8,000,000, payable in three months in Hong Kong dollars. To hedge its exposed liability position, Sizzler entered a forward contract for purchase of HK$8,000,000 on March 1, 2018. On March 1, Sizzler closed the forward contract and used the Hong Kong dollars to pay its supplier. Sizzler's accounting year ends January 31. Exchange rates ($/HK$) are as follows: December 1, 2017 January 31, 2018 March 1, 2018 Spot rate $0.1293 0.1303 0.1307 Date 12/01/17 Forward rate for delivery March 1, 2018 $0.1297 0.1308 Prepare the journal entries Sizzler Foods made on December 1, 2017 and March 1, 2018 to record the above transactions, as well as its end-of-year adjusting entries on January 31, 2018. General Journal Description To record goods purchased. ÷ 수 Debit 0 0 Credit 0 0

Hedging Exposed Liability Position with Adjusting Entries On December 1, 2017, Sizzler Foods, a U.S. company. purchased merchandise from a Hong Kong supplier at a price of HK$8,000,000, payable in three months in Hong Kong dollars. To hedge its exposed liability position, Sizzler entered a forward contract for purchase of HK$8,000,000 on March 1, 2018. On March 1, Sizzler closed the forward contract and used the Hong Kong dollars to pay its supplier. Sizzler's accounting year ends January 31. Exchange rates ($/HK$) are as follows: December 1, 2017 January 31, 2018 March 1, 2018 Spot rate $0.1293 0.1303 0.1307 Date 12/01/17 Forward rate for delivery March 1, 2018 $0.1297 0.1308 Prepare the journal entries Sizzler Foods made on December 1, 2017 and March 1, 2018 to record the above transactions, as well as its end-of-year adjusting entries on January 31, 2018. General Journal Description To record goods purchased. ÷ 수 Debit 0 0 Credit 0 0

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Hedging Exposed Liability Position with Adjusting Entries On December 1, 2017, Sizzler Foods, a U.S. company, purchased merchandise from a Hong Kong supplier at a price of HK$8,000,000, payable in three months in Hong Kong dollars. To hedge its exposed liability position, Sizzler entered a forward contract for purchase of HK$8,000,000 on March 1, 2018. On March 1, Sizzler closed the forward contract and used the Hong Kong dollars to pay its supplier. Sizzler's accounting year ends January 31. Exchange rates ($/HK$) are as follows: December 1, 2017 January 31, 2018 March 1, 2018 Date 12/01/17 Spot rate $0.1293 0.1303 0.1307 Prepare the journal entries Sizzler Foods made on December 1, 2017 and March 1, 2018 to record the above transactions, as well as its end-of-year adjusting entries on January 31, 2018. 04046650 Forward rate for delivery March 1, 2018 $0.1297 0.1308 General Journal Description To record goods purchased. + Debit 0 0 Credit 0 0
Transcribed Image Text:Hedging Exposed Liability Position with Adjusting Entries On December 1, 2017, Sizzler Foods, a U.S. company, purchased merchandise from a Hong Kong supplier at a price of HK$8,000,000, payable in three months in Hong Kong dollars. To hedge its exposed liability position, Sizzler entered a forward contract for purchase of HK$8,000,000 on March 1, 2018. On March 1, Sizzler closed the forward contract and used the Hong Kong dollars to pay its supplier. Sizzler's accounting year ends January 31. Exchange rates ($/HK$) are as follows: December 1, 2017 January 31, 2018 March 1, 2018 Date 12/01/17 Spot rate $0.1293 0.1303 0.1307 Prepare the journal entries Sizzler Foods made on December 1, 2017 and March 1, 2018 to record the above transactions, as well as its end-of-year adjusting entries on January 31, 2018. 04046650 Forward rate for delivery March 1, 2018 $0.1297 0.1308 General Journal Description To record goods purchased. + Debit 0 0 Credit 0 0
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