Prepare all journal entries for the option hedge of a forecasted transaction and for the purchase of raw materials.
Based on past experience, Maas Corp. (a U.S.-based company) expects to purchase raw materials from a foreign supplier at a cost of 2,000,000 francs on March 15, 2021. To hedge this
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Prepare all
journal entries for the option hedge of a forecasted transaction and for the purchase of raw materials.
![Req A
Req B and C
Prepare all journal entries for the option hedge of a forecasted transaction and for the purchase of raw materials. (If no entry is require
for a transaction/event, select "No journal entry required" in the first account field.)
View transaction list
10
>
1
Record purchase of foreign currency option as an asset.
Record entry for order placed with foreign supplier.
Record the entry to recognize the increase in the value of
the foreign currency option.
Record entry to recognize the decrease in the time value
of the option as an increase in cost of goods sold.
4
Credit
Record the entry to recognize the increase in the value of
the foreign currency option.
5
Record entry to recognize the decrease in the time value
of the option as an increase in cost of goods sold.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5bd24d5e-ed33-4881-8643-64f182425bac%2F5e791c08-a5a4-4b83-9049-04318f08970e%2F8fvezhe_processed.png&w=3840&q=75)
![Req A
Req B and C
Prepare all journal entries for the option hedge of a forecasted transaction and for the purchase of raw materials. (If no entry is require
for a transaction/event, select "No journal entry required" in the first account field.)
View transaction list
Record the entry to recognize the increase in the value of
10
>
the foreign currency option.
Record entry to recognize the decrease in the time value
of the option as an increase in cost of goods sold.
6
7
Record the exercise of foreign currency option.
8
Record the purchase of inventory.
Credit
9
Record entry to transfer the amount accumulated in
АОСІ.
10 Record entry to transfer the cost of the raw materials to
cost of goods sold.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5bd24d5e-ed33-4881-8643-64f182425bac%2F5e791c08-a5a4-4b83-9049-04318f08970e%2Fkfz7mm_processed.png&w=3840&q=75)
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