Question 3 Chrysler Exporters Inc., a US wholesaler is engaged in foreign trade. The following transactions were recorded: 1. On December 1, 2020, Chrysler Exporters Ic., purchased merchandise from Chang's Ltd a Japanese manufacturer. The invoice was for ¥500,000, payable on April 1, 2021. On the same day, Chrysler Exporters Inc. accepted a forward exchange contract (forward I. contract) to buy ¥500,000 on April 1, 2021. III. On April 1, 2021, the ¥500,000 was delivered on the contract and the supplier was settled. IV. The spot rates and the forward rates were as follows: Date Spot rate Forward rate for delivery (¥) on April 1, 2021 December 1, 2020 $0.0084 $0.0089 December 31, 2020 0.0083 0.0088 April 1, 2021 0.0092

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Prepare the journal entries to track the accounts payable and the forward contract on December 31, 2020, for Chrysler Exporters Inc. financial statements.

Question 3
Chrysler Exporters Inc., a US wholesaler is engaged in foreign trade. The following transactions
were recorded:
On December 1, 2020, Chrysler Exporters Inc., purchased merchandise from Chang's Ltd a
I.
Japanese manufacturer. The invoice was for ¥500,000, payable on April 1, 2021.
On the same day, Chrysler Exporters Inc. accepted a forward exchange contract (forward
II.
contract) to buy ¥500,000 on April 1, 2021.
On April 1, 2021, the ¥500,000 was delivered on the contract and the supplier was settled.
The spot rates and the forward rates were as follows:
III.
IV.
Date
Spot rate
Forward rate
for delivery (¥) on April 1, 2021
December 1, 2020
$0.0084
$0.0089
December 31, 2020
0.0083
0.0088
April 1, 2021
0.0092
Transcribed Image Text:Question 3 Chrysler Exporters Inc., a US wholesaler is engaged in foreign trade. The following transactions were recorded: On December 1, 2020, Chrysler Exporters Inc., purchased merchandise from Chang's Ltd a I. Japanese manufacturer. The invoice was for ¥500,000, payable on April 1, 2021. On the same day, Chrysler Exporters Inc. accepted a forward exchange contract (forward II. contract) to buy ¥500,000 on April 1, 2021. On April 1, 2021, the ¥500,000 was delivered on the contract and the supplier was settled. The spot rates and the forward rates were as follows: III. IV. Date Spot rate Forward rate for delivery (¥) on April 1, 2021 December 1, 2020 $0.0084 $0.0089 December 31, 2020 0.0083 0.0088 April 1, 2021 0.0092
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