On December 1, 2020, Beta Company, a U.S. electronics company purchased equipment from a Brazilan company for 900,000 Brazilian Real. The account is to be settiec January 31, 2021. To hedge against fluctuations in the exchange rate, On December 1, 2020 Beta Company entered into a forward contract to buy the 900,000 Brazilan Rea January 31, 2021 for $0.5453 Beta Comoany's year-end is December31 and Soot rates and the forward.rates for the Brazilan Beal wernas follows Spot Rate Forward Rate (Delivery on January 31, 2021) December 1, 2020 05451 $0.5425 $0.5453 $0.5426 December 31, 2020 Jaruary 312021 S0.5395 Required: Prepare the journal entries to record the transactions, adjust the accounts en December 31, 2020 and settle the payable and forward contract on January 31,2021.
On December 1, 2020, Beta Company, a U.S. electronics company purchased equipment from a Brazilan company for 900,000 Brazilian Real. The account is to be settiec January 31, 2021. To hedge against fluctuations in the exchange rate, On December 1, 2020 Beta Company entered into a forward contract to buy the 900,000 Brazilan Rea January 31, 2021 for $0.5453 Beta Comoany's year-end is December31 and Soot rates and the forward.rates for the Brazilan Beal wernas follows Spot Rate Forward Rate (Delivery on January 31, 2021) December 1, 2020 05451 $0.5425 $0.5453 $0.5426 December 31, 2020 Jaruary 312021 S0.5395 Required: Prepare the journal entries to record the transactions, adjust the accounts en December 31, 2020 and settle the payable and forward contract on January 31,2021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On December 1, 2020, Beta Company, a U.S. electronics company purchased equipment from a Brazilian company for 900,000 Brazilian Real. The account is to be sottled on
January 31, 2021. To hedge against fluctuations in the exchange rate, On December 1, 2020 Beta Company entered into a forward contract to buy the 900,000 Brazilan Real on
January 31, 2021 for $0.5453.
Beta Company'a year-end is December 31and Soot.rates and the.forward.cates for the Brazilan Beal were as follows:
Spot
Rate
Forward Rate
(Delivery on January 31,
2021)
December 1, 2020 $0.5451
December 31.
2020
January 31,2021
$0.5453
$0.5426
$0.5425
$0.5396
Required:
Prepare the Journal entries to record the transactions, adjust the accounts on December 31, 2020 and settle the payable and forward contract on January 31,2021.
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