On December 1, 2020, Crane Corporation "committed" to sell inventory to a foreign company, to be delivered and paid April 1, 2021. The selling price was 800,000 units of foreign currency (FC). To hedge against fluctuations in the exchange rate, Crane entered into a forward contract on December 1 to sell 800,000 units of FC on April 1, 2021 at the agreed rate of $.475 per FC. The following exchange rates were quoted: Date Spot Rate(Delivery on 4/1/2021) Forward Rate 12/1/2020 0.476 0.475 12/31/20200.470 4/1/2021 0.473 0.478 ===== Required: Prepare the journal entries necessary for Crane during 2020 and 2021 to account for the transactions.

On December 1, 2020, Crane Corporation "committed" to sell inventory to a foreign company, to be delivered and paid April 1, 2021. The selling price was 800,000 units of foreign currency (FC). To hedge against fluctuations in the exchange rate, Crane entered into a forward contract on December 1 to sell 800,000 units of FC on April 1, 2021 at the agreed rate of $.475 per FC. The following exchange rates were quoted: Date Spot Rate(Delivery on 4/1/2021) Forward Rate 12/1/2020 0.476 0.475 12/31/20200.470 4/1/2021 0.473 0.478 ===== Required: Prepare the journal entries necessary for Crane during 2020 and 2021 to account for the transactions.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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