On November 1, 2020, Americo, Corporation purchased wine on credit from Venezia Company for €800,000. Payment is not due for 120 days. Thus, the transaction will be settled on February 28, 2021. On November 1, 2020, Americo, Corporation also entered a 120-day forward contract to purchase €800,000. The forward contract is not designated as a hedge. The direct exchange rates were as follows: SPOT FORWARD 11/1/2020 $ 1.22 $ 12/31/2020 $ 1.18 $ 2/28/2021 $ 1.19 1.24 (120 days) 1.17 (60 days)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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The journal entry on 12/31/20 TO RECORD THE REVALUATION OF THE FC PAYABLE TO VENDOR (€) would
include:
A DEBIT TO FC PAYABLE TO VENDOR (€) AND A CREDIT TO FOREIGN CURRENCY TRANSACTION GAIN IN
THE AMOUNT OF:
The journal entry on 12/31/20 TO RECORD THE REVALUATION OF THE FC RECEIVABLE FROM FX BROKER (€)
would include:
A DEBIT TO FOREIGN CURRENCY TRANSACTION LOSS AND A CREDIT TO FC RECEIVABLE FROM FX
BROKER (€) IN THE AMOUNT OF:
Transcribed Image Text:The journal entry on 12/31/20 TO RECORD THE REVALUATION OF THE FC PAYABLE TO VENDOR (€) would include: A DEBIT TO FC PAYABLE TO VENDOR (€) AND A CREDIT TO FOREIGN CURRENCY TRANSACTION GAIN IN THE AMOUNT OF: The journal entry on 12/31/20 TO RECORD THE REVALUATION OF THE FC RECEIVABLE FROM FX BROKER (€) would include: A DEBIT TO FOREIGN CURRENCY TRANSACTION LOSS AND A CREDIT TO FC RECEIVABLE FROM FX BROKER (€) IN THE AMOUNT OF:
On November 1, 2020, Americo, Corporation purchased wine on credit from Venezia Company for €800,000.
Payment is not due for 120 days. Thus, the transaction will be settled on February 28, 2021. On November 1, 2020,
Americo, Corporation also entered a 120-day forward contract to purchase €800,000. The forward contract is not
designated as a hedge. The direct exchange rates were as follows:
SPOT
FORWARD
11/1/2020 $ 1.22 $
12/31/2020 $ 1.18 $
2/28/2021 $ 1.19
1.24 (120 days)
1.17 (60 days)
Transcribed Image Text:On November 1, 2020, Americo, Corporation purchased wine on credit from Venezia Company for €800,000. Payment is not due for 120 days. Thus, the transaction will be settled on February 28, 2021. On November 1, 2020, Americo, Corporation also entered a 120-day forward contract to purchase €800,000. The forward contract is not designated as a hedge. The direct exchange rates were as follows: SPOT FORWARD 11/1/2020 $ 1.22 $ 12/31/2020 $ 1.18 $ 2/28/2021 $ 1.19 1.24 (120 days) 1.17 (60 days)
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