Prepare all journal entries, including December 31 adjusting entries, to record the sale and forward contract. (Do not round intermedia calculations. Round your final answers to the nearest whole dollar. If no entry is required for a transaction/event, select "No journal ent required" in the first account field.) View transaction list Record the premium or discount expense. 12 <> 7 Record the entry for changes in the exchange rate. Record entry to adjust the carrying value of the forward contract to its current fair value. 8 Record the change in the fair value of the forward contract. Credit 10 Record the premium or discount expense. 11 Record the receipt of FCUS. 12 Record settlement of forward contract.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
Prepare all journal entries, including December 31 adjusting entries, to record the sale and forward contract. (Do not round intermedia
calculations. Round your final answers to the nearest whole dollar. If no entry is required for a transaction/event, select "No journal ent
required" in the first account field.)
View transaction list
6.
Record the premium or discount expense.
12
7
Record the entry for changes in the exchange rate.
8
Record entry to adjust the carrying value of the forward
contract to its current fair value.
9.
Record the change in the fair value of the forward
contract.
Credit
10 Record the premium or discount expense.
11
Record the receipt of FCUS.
12 Record settlement of forward contract.
Note :
journal entry has been entered
%3D
Transcribed Image Text:Prepare all journal entries, including December 31 adjusting entries, to record the sale and forward contract. (Do not round intermedia calculations. Round your final answers to the nearest whole dollar. If no entry is required for a transaction/event, select "No journal ent required" in the first account field.) View transaction list 6. Record the premium or discount expense. 12 7 Record the entry for changes in the exchange rate. 8 Record entry to adjust the carrying value of the forward contract to its current fair value. 9. Record the change in the fair value of the forward contract. Credit 10 Record the premium or discount expense. 11 Record the receipt of FCUS. 12 Record settlement of forward contract. Note : journal entry has been entered %3D
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
Spot Rate
$0.29
Date
(to April 30, 2018)
$ 0.28
November 1, 2017
December 31, 2017
April 30, 2018
0.27
0.25
0.26
N/A
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?
Complete this question by entering your answers in the tabs below.
Req A
Req B and C
Prepare all journal entries, including December 31 adjusting entries, to record the sale and forward contract. (Do not round intermediat
Transcribed Image Text: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 Spot Rate $0.29 Date (to April 30, 2018) $ 0.28 November 1, 2017 December 31, 2017 April 30, 2018 0.27 0.25 0.26 N/A 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? Complete this question by entering your answers in the tabs below. Req A Req B and C Prepare all journal entries, including December 31 adjusting entries, to record the sale and forward contract. (Do not round intermediat
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Trade Credit
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education