1.On September 1, 2020, Bain Corp. received an order for equipment from a foreigncustomer for 300,000 local currency units (LCU) when the peso equivalent was P96,000. Bainshipped the equipment on October 15, 2020, and billed the customer for 300,000 LCU when thepeso equivalent was P100,000. Brain received the customer's remittance in full onNovember16, 2020, and sold the 300,000 LCU for P105,000. In its income statement for theyear ended December 31, 2020, Brain should report a foreign exchange transaction gain of?

Foreign Currency: It is the conversion of one country's currency into another. In a free economy, a…

On September 1, 2020, Bain Corp. received an order for equipment from a foreign customer for 300,000 local currency units (LCU) when the peso equivalent was P96,000. Bain shipped the equipment on October 15, 2020, and billed the customer for 300,000 LCU when the 1. peso equivalent was P100,000. Brain received the customer's remittance in full on November16, 2020, and sold the 300,000 LCU for P105,000. In its income statement for the year ended December 31, 2020, Brain should report a foreign exchange transaction gain of?

On September 1, 2020, Bain Corp. received an order for equipment from a foreign customer for 300,000 local currency units (LCU) when the peso equivalent was P96,000. Bain shipped the equipment on October 15, 2020, and billed the customer for 300,000 LCU when the 1. peso equivalent was P100,000. Brain received the customer's remittance in full on November16, 2020, and sold the 300,000 LCU for P105,000. In its income statement for the year ended December 31, 2020, Brain should report a foreign exchange transaction gain of?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Related questions

Q: Assume that Loblaws negotiated a forward contract to purchase 200,000 British pounds in 90 days. The…

A: To calculate the gain or loss for Loblaws in this forward contract scenario, need to compare the…

Q: Max Ltd sells equipment to Star Ltd, a U.S. company on 30/01/2020 for US$250,000. Goods are invoiced…

A: In this scenario, we will explore the accounting transactions of Max Ltd, a company with its…

Q: Required: prepare the journal entry based on the given information

A: It has been given in the question that Contract price of the special order goods is 2,000,000 yen…

Q: On October 1, 2020, Mertag Company (a U.S.-based company) receives an order from a customer in…

A: PLEASE LIKE THE ANSWER, YOUR RESPONSE MATTERS ANSWER: Because the forward exchange rate is used…

Q: pennymarkets corp, a US firm, acquired Supervalu, on January 1, 2019. Supervalu is a swedish company…

A: A trial balance is a report used in accounting to ensure that the total debits equal the total…

Q: pa e rate fluctuations on reported income in 2020? pindler acquired the surfboards on December 1,…

A: Exchange rate gain (loss) is the difference between when rate when the invoice was raised and when…

Q: Maplewood Inc. sells lumber to a number of clients around the world. On December 1, 2020 the company…

A: Balance sheet:Balance sheet stands for the statement and information that shows the assets and…

Q: Clayton Industries sells medical equipment worldwide. On March 1 of the current year, the company…

A: “Hey, since there are multiple requirements posted, we will answer first three requirements. If you…

Q: cebreaker Company (a U.S.-based company) purchases materials from a foreign supplier on December 1,…

A: Here asked for multi sub part question we will solve for first three sub part question for you. If…

Q: Use the following information for Problems 18 through 20.On June 1, 2017, Micro Corp. received an…

Q: a. Assume that Spindler acquired the surfboards on September 1, 2020, and made payment on December…

A: Foreign exchange loss or gain occurs when one company sells its goods to another foreign currency…

Q: Maloney Corporation has decided to speculate on the foreign exchange market, and has entered into a…

A: Introduction:- This question involves the preparation of journal entries to record a forward…

Q: 19,000 dinars to be made on March 1, 2021 The materials are consumed immediately and recognized as…

A: DICLAIMER:SINCE YOU HAVE POSTED MULTIPLE SUB PART QUESTION, WE WILL SOLVE 3 PARTS .TO GET OTHERS…

Q: Spindler, Inc. (a U.S.-based company), imports surfboards from a supplier in Brazil and sells them…

A: Foreign exchange fluctuation loss/gain: Foreign exchange fluctuation loss/gain is occurred if…

Q: November 1, 2020, Sapelo Co. (U.S. manufacturer) sold an aircraft for 1 million New Zealand Dollars…

A: This is a question related to accounting and foreign exchange hedging. The scenario involves Sapelo…

Q: On December 15, 2017, Lisbeth Inc. (a U.S. company) purchases merchandise inventory from a foreign…

A: Prepare all journal entries for company L.

Q: No profit is recognized related to inventory

A: When an entity deals with the foreign market it may have different functions and reporting…

Q: Southerland Corporation, a U.S. video games manufacturer, had several foreign exchange transactions…

A: Foreign Exchange Transactions:It refers to the buying and selling of a property.After paying a…

Question

100%

1.
On September 1, 2020, Bain Corp. received an order for equipment from a foreign
customer for 300,000 local currency units (LCU) when the peso equivalent was P96,000. Bain
shipped the equipment on October 15, 2020, and billed the customer for 300,000 LCU when the
peso equivalent was P100,000. Brain received the customer's remittance in full on
November16, 2020, and sold the 300,000 LCU for P105,000. In its income statement for the
year ended December 31, 2020, Brain should report a foreign exchange transaction gain of?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1 Concept

VIEW

Step 2 Calculation and Explanation

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Accounting for Foreign Exchange Transactions

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

On June 1, 2017, Micro Corp. received an order for parts from a Mexican customer at a price of 1,000,000 Mexican pesos with a delivery date of July 31, 2017. On June 1, when the U.S. dollar–Mexican peso spot rate is $0.115, Micro Corp. entered into a two month forward contract to sell 1,000,000 pesos at a forward rate of $0.12 per peso. Micro designates the forward contract as a fair value hedge of the firm commitment to receive pesos, and the fair value of the firm commitment is measured by referring to changes in the peso forward rate. Micro delivers the parts and receives payment on July 31, 2017, when the peso spot rate is $0.118. On June 30, 2017, the Mexican peso spot rate is $0.123, and the forward contract has a fair value of $2,400.What is Micro’s net increase or decrease in cash flow from having entered into this forward contract hedge? Choose the correct.a. $–0–.b. $1,000 increase in cash flow.c. $1,500 decrease in cash flow.d. $2,000 increase in cash flow.
7
On August 1, Ling-Harvey Corporation (a U.S.-based importer) placed an order to purchase merchandise from a foreign supplier at a price of 400,000 ringgits. Ling-Harvey will receive and make payment for the merchandise in three months on October 31. On August 1, Ling-Harvey entered into a forward contract to purchase 400,000 ringgits in three months at a forward rate of $0.60. It properly designates the forward contract as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the forward rate. Relevant exchange rates for the ringgit are as follows:Ling-Harvey’s incremental borrowing rate is 12 percent. The present value factor for one month at an annual interest rate of 12 percent (1 percent per month) is 0.9901. Ling-Harvey must close its books and prepare its third-quarter financial statements on September 30.a. Prepare journal entries for the forward contract and firm commitment through October 31.b.…
Brandlin company of anaheim, california, sells parts to a foreign customer on december 1, 2017, with payment of 24,000 korunas to be received on march 1, 2018. Brandlin enters into a forward contact on december 1, 2017 to sell 24,000 korunas on march 1, 2018. Relevant exchange rates for the korunas on various dates are as follow: date spot rate forward rate december 1, 2017 4.20 4.275 december 31, 2017 4.30 4.400 march 1, 2018 4.45 n/a brandli's incremental borrowing rate is 12 percent. The present value factor for two months at annual interest rate of 12 percent (1 percent per month) is 0.9803. Brandlin must close its books and prepare financial statements at december 31. 1. Assuming that brandlin designates the forward contract as a cash flow hedge of a foreign currency receivable and recognizes any premium or discount…
Concord Company, a U.S. company, made credit sales to four customers in Asia on September 15, 2018, and received payment on October 15, 2018. Information related to these sales is shown below: Concord Company Sales Transactions September 15, 2018 Customer Location Invoice Price Currency Prima Industries Ltd Mumbai 7,195,000 Indian rupees (INR) Samal Island Group Cebu City 5,417,000 Philippine peso (PHP) Yokama Properties Inc Osaka 11,210,000 Japanese yen (JPY) Kinabalu Trading Ltd Johur Bahru 414,000 Malaysian ringgit (MYR) The Concord Company’s fiscal year ends on September 30. Required: 1. Use historical exchange rate information available on the Internet x-rates, Historical Lookup, to find the exchange rates between the U.S. dollar and each foreign currency for September 15, September 30, and October 15, 2018. 2. Determine the foreign exchange gains and losses that Concord Company would have recognized in net income in the fiscal years ended September 30, 2018 and September 30,…
Spindler, Inc. (a U.S.-based company), imports surfboards from a supplier in Brazil and sells them in the United States. Purchases are denominated in terms of the Brazilian real (BRL). During 2020, Spindler acquires 420 surfboards at a price of BRL 1,600 per surfboard, for a total of BRL 672,000.00. Spindler will pay for the surfboards when it sells them. Relevant exchange rates are as follows: Date U.S. Dollar perBrazilian Real (BRL) September 1, 2020 $ 0.230 December 1, 2020 0.220 December 31, 2020 0.240 March 1, 2021 0.225 Assume that Spindler acquired the surfboards on September 1, 2020, and made payment on December 1, 2020. What is the effect of the exchange rate fluctuations on reported income in 2020? Assume that Spindler acquired the surfboards on December 1, 2020, and made payment on March 1, 2021. What is the effect of the exchange rate fluctuations on reported income in 2020 and 2021? Assume that Spindler acquired the surfboards on…
On October 1, 2020, Mertag Company (a U.S.-based company) receives an order from a customer in Poland to deliver goods on January 31, 2021, for a price of 1,000,000 Polish zlotys (PLN). Mertag enters into a forward contract on October 1, 2020, to sell PLN 1,000,000 in four months (on January 31, 2021). U.S. dollar–Polish zloty exchange rates are as follows: Date Spot Rate Forward Rate(to January 31, 2021) October 1, 2020 $ 0.25 $ 0.29 December 31, 2020 0.28 0.31 January 31, 2021 0.30 N/A Mertag designates the forward contract as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the forward rate, and, therefore, forward points are included in assessing hedge effectiveness. Mertag must close its books and prepare financial statements on December 31. Discounting to present value can be ignored. Prepare journal entries for the foreign currency forward contract,…
Manji
On October 1, 2020, Mertag Company (a U.S.-based company) receives an order from a customer in Poland to deliver goods on January 31, 2021, for a price of 1,030,000 Polish zlotys (PLN). Mertag enters into a forward contract on October 1, 2020, to sell PLN 1,030,000 in four months (on January 31, 2021). U.S. dollar–Polish zloty exchange rates are as follows: Date Spot Rate Forward Rate(to January 31, 2021) October 1, 2020 $ 0.26 $ 0.30 December 31, 2020 0.29 0.33 January 31, 2021 0.31 N/A Mertag designates the forward contract as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the forward rate, and, therefore, forward points are included in assessing hedge effectiveness. Mertag must close its books and prepare financial statements on December 31. Discounting to present value can be ignored. Determine the net benefit, if any, realized by Mertag from entering…
On August 1, Ling-Harvey Corporation (a U.S.-based importer) placed an order to purchase merchandise from a foreign supplier at a price of 400,000 ringgits. Ling-Harvey will receive and make payment for the merchandise in three months on October 31. On August 1, Ling-Harvey entered into a forward contract to purchase 400,000 ringgits in three months at a forward rate of $0.60. It properly designates the forward contract as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the forward rate. Relevant exchange rates for the ringgit are as follows: Date Spot rate Forward rate ( to October 31) August 1 $0.60 $0.60 September30 0.63 0.66 October 31 0.68 N/A Ling-Harvey’s incremental borrowing rate is 12 percent. The present value factor for one month at an annual interest rate of 12 percent (1 percent per month) is 0.9901. Ling-Harvey must close its books and prepare its third-quarter financial…
On October 1, 2020, Mertag Company (a U.S.-based company) receives an order from a customer in Poland to deliver goods on January 31, 2021, for a price of 1,004,000 Polish zlotys (PLN). Mertag enters into a forward contract on October 1, 2020, to sell PLN 1,004,000 in four months (on January 31, 2021). U.S. dollar–Polish zloty exchange rates are as follows: Date Spot Rate Forward Rate(to January 31, 2021) October 1, 2020 $ 0.27 $ 0.31 December 31, 2020 0.30 0.34 January 31, 2021 0.32 N/A Mertag designates the forward contract as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the forward rate, and, therefore, forward points are included in assessing hedge effectiveness. Mertag must close its books and prepare financial statements on December 31. Discounting to present value can be ignored. Prepare journal entries for the foreign currency forward contract,…
Vinubhai

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS