On December 1, 20X8, Denizen Corporation entered into a 120-day forward contract to purchase 200,000 Canadian dollars (C$). Denizen's fiscal year ends on December 31. The forward contract was to hedge a firm commitment agreement made on December 1, 20X8, to purchase electronic goods on January 30, with payment due on March 31, 20X8. The derivative is designated as a fair value hedge. The direct exchange rates follow: Spot Rate Forward Rate for March 1, 20X9 December 1, 20X8 $ 0.940 $ 0.944 December 31, 20X8 $ 0.945 $ 0.947 January 30, 20X9 $ 0.942 $ 0.943 March 31, 20X9 $ 0.941 Required: Prepare all journal entries for Denizen Corporation.

On December 1, 20X8, Denizen Corporation entered into a 120-day forward contract to purchase 200,000 Canadian dollars (C$). Denizen's fiscal year ends on December 31. The forward contract was to hedge a firm commitment agreement made on December 1, 20X8, to purchase electronic goods on January 30, with payment due on March 31, 20X8. The derivative is designated as a fair value hedge. The direct exchange rates follow: Spot Rate Forward Rate for March 1, 20X9 December 1, 20X8 $ 0.940 $ 0.944 December 31, 20X8 $ 0.945 $ 0.947 January 30, 20X9 $ 0.942 $ 0.943 March 31, 20X9 $ 0.941 Required: Prepare all journal entries for Denizen Corporation.

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter9: Operating Activities

Section: Chapter Questions

Problem 22PC

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	Spot Rate	Forward Rate for March 1, 20X9
December 1, 20X8	$ 0.940	$ 0.944
December 31, 20X8	$ 0.945	$ 0.947
January 30, 20X9	$ 0.942	$ 0.943
March 31, 20X9	$ 0.941

Required:

Prepare all journal entries for Denizen Corporation.

Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.

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