November 1, 2020, Sapelo Co. (U.S. manufacturer) sold an aircraft for 1 million New Zealand Dollars (NZ$) to a New Zealand company, Waiheke Corp. Sapelo Co. will receive payment on January 30, 2021 in New Zealand Dollars. To protect the position/value of its receivables, Sapelo Co. entered into a 90-day forward contract on November 1, 2020 to sell 1 million New Zealand Dollars. On November 1, 2020, the forward rate was US$0.79 per New Zealand Dollar. This forward contract applies net settlement and is a fair value hedge. Ignore the time value of money. Relevant exchange rate per New Zealand Dollar: 1 November 202031 Desember 2020 30 Januari 2021 Spot Rate US$0,79 US$0,75 US$0,73 Forward Rate untuk 30/1/’21 US$0,79 US$0,76 US$0,73 Make journal entries to be recorded by Sapelo Co. on November 1, 2020, December 31, 2020, and January 30, 2021. December 31 is the end of the fiscal year.
November 1, 2020, Sapelo Co. (U.S. manufacturer) sold an aircraft for 1 million New Zealand Dollars (NZ$) to a New Zealand company, Waiheke Corp. Sapelo Co. will receive payment on January 30, 2021 in New Zealand Dollars. To protect the position/value of its receivables, Sapelo Co. entered into a 90-day forward contract on November 1, 2020 to sell 1 million New Zealand Dollars. On November 1, 2020, the forward rate was US$0.79 per New Zealand Dollar. This forward contract applies net settlement and is a fair value hedge. Ignore the time value of money. Relevant exchange rate per New Zealand Dollar: 1 November 202031 Desember 2020 30 Januari 2021 Spot Rate US$0,79 US$0,75 US$0,73 Forward Rate untuk 30/1/’21 US$0,79 US$0,76 US$0,73 Make journal entries to be recorded by Sapelo Co. on November 1, 2020, December 31, 2020, and January 30, 2021. December 31 is the end of the fiscal year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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November 1, 2020, Sapelo Co. (U.S. manufacturer) sold an aircraft for 1 million New Zealand Dollars (NZ$) to a New Zealand company, Waiheke Corp. Sapelo Co. will receive payment on January 30, 2021 in New Zealand Dollars. To protect the position/value of its receivables, Sapelo Co. entered into a 90-day forward contract on November 1, 2020 to sell 1 million New Zealand Dollars. On November 1, 2020, the forward rate was US$0.79 per New Zealand Dollar. This forward contract applies net settlement and is a fair value hedge. Ignore the time value of money. Relevant exchange rate per New Zealand Dollar:
1 November 202031 Desember 2020 30 Januari 2021 Spot Rate US$0,79 US$0,75 US$0,73 Forward Rate untuk 30/1/’21 US$0,79 US$0,76 US$0,73
Make journal entries to be recorded by Sapelo Co. on November 1, 2020, December 31, 2020, and January 30, 2021. December 31 is the end of the fiscal year.
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