On November 1, 2017, Bernard Company (a U.S.-based company) sold merchandise to a foreign customer for 180,000 FCUS withpayment to be received on April 30, 2018. At the date of sale, Bernard entered into a six-month forward contract to sell 180,000FCUS. The company properly designates the forward contract as a cash flow hedge of a foreign currency receivable. Thefollowing exchange rates apply:Forward RateSpot Rate$0.29Date(to April 30, 2018)$ 0.28November 1, 2017December 31, 2017April 30, 20180.270.250.26N/ABernard's incremental borrowing rate is 12 percent. The present value factor for four months at an annual interest rate of 12percent (1 percent per month) is 0.9610.a. Prepare all journal entries, including December 31 adjusting entries, to record the sale and forward contract.b. What is the impact on net income in 2017?C. What is the impact on net income in 2018?Complete this question by entering your answers in the tabs below.Req AReq B and CPrepare all journal entries, including December 31 adjusting entries, to record the sale and forward contract. (Do not round intermediat Prepare all journal entries, including December 31 adjusting entries, to record the sale and forward contract. (Do not round intermediatecalculations. Round your final answers to the nearest whole dollar. If no entry is required for a transaction/event, select "No journal entryrequired" in the first account field.)View transaction list121Record sale of merchandise to foreign customer.2 Record the forward contract.Record the entry for changes in the exchange rate.Record entry to adjust the carrying value of the forwardcontract to its current fair value.4CreditRecord the change in the fair value of the forwardcontract.Record the premium or discount expense.Record the entry for changes in the exchange rate.

Sales on November 1 , 2017 : = 180000 * 0.29 = 52200

On November 1, 2017, Bernard Company (a U.S.-based company) sold merchandise to a foreign customer for 180,000 FCUS with payment to be received on April 30, 2018. At the date of sale, Bernard entered into a six-month forward contract to sell 180,000 FCUS. The company properly designates the forward contract as a cash flow hedge of a foreign currency receivable. The following exchange rates apply: Forward Rate (to April 30, 2018) $ 0.28 0.25 N/A Date Spot Rate November 1, 2017 December 31, 2017 April 30, 2018 $0.29 0.27 0.26 Bernard's incremental borrowing rate is 12 percent. The present value factor for four months at an annual interest rate of 12 percent (1 percent per month) is 0.9610. a. Prepare all journal entries, including December 31 adjusting entries, to record the sale and forward contract. b. What is the impact on net income in 2017? c. What is the impact on net income in 2018?

On November 1, 2017, Bernard Company (a U.S.-based company) sold merchandise to a foreign customer for 180,000 FCUS with payment to be received on April 30, 2018. At the date of sale, Bernard entered into a six-month forward contract to sell 180,000 FCUS. The company properly designates the forward contract as a cash flow hedge of a foreign currency receivable. The following exchange rates apply: Forward Rate (to April 30, 2018) $ 0.28 0.25 N/A Date Spot Rate November 1, 2017 December 31, 2017 April 30, 2018 $0.29 0.27 0.26 Bernard's incremental borrowing rate is 12 percent. The present value factor for four months at an annual interest rate of 12 percent (1 percent per month) is 0.9610. a. Prepare all journal entries, including December 31 adjusting entries, to record the sale and forward contract. b. What is the impact on net income in 2017? c. What is the impact on net income in 2018?

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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