Tex Hardware sells many of its products overseas. The following are some selected transactions. 1. Tex sold electronic subassemblies to a firm in Denmark for 190,000 Danish kroner (Dkr) on June 6, when the exchange rate was Dkr 1= $0.1790. Collection was made on July 3 when the rate was Dkr 1 = $0.1793. 2. On July 22, Tex sold copper fittings to a company London for £39,000 with payment due on September 20. Also, on July 22, Tex entered into a 60-day forward contract to sell £39,000 at a forward rate of £1 = $1.630. The forward contract is not designated as a hedge. The spot rates follow: July 22 September 20 £1 £1 October 11 November 10 $1.580 $1.612 3. Tex sold storage devices to a Canadian firm for C$80,000 (Canadian dollars) on October 11, with payment due on November 10. On October 11, Tex entered into a 30-day forward contract to sell Canadian dollars at a forward rate of C$1 = $0.730. The forward contract is not designated as a hedge. The spot rates were as follows: C$1= $0.735 C$1= $0.732 Required: Prepare journal entries to record Tex's foreign sales of its products, use of forward contracts, and settlements of the receivables. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Tex Hardware sells many of its products overseas. The following are some selected transactions. 1. Tex sold electronic subassemblies to a firm in Denmark for 190,000 Danish kroner (Dkr) on June 6, when the exchange rate was Dkr 1= $0.1790. Collection was made on July 3 when the rate was Dkr 1 = $0.1793. 2. On July 22, Tex sold copper fittings to a company London for £39,000 with payment due on September 20. Also, on July 22, Tex entered into a 60-day forward contract to sell £39,000 at a forward rate of £1 = $1.630. The forward contract is not designated as a hedge. The spot rates follow: July 22 September 20 £1 £1 October 11 November 10 $1.580 $1.612 3. Tex sold storage devices to a Canadian firm for C$80,000 (Canadian dollars) on October 11, with payment due on November 10. On October 11, Tex entered into a 30-day forward contract to sell Canadian dollars at a forward rate of C$1 = $0.730. The forward contract is not designated as a hedge. The spot rates were as follows: C$1= $0.735 C$1= $0.732 Required: Prepare journal entries to record Tex's foreign sales of its products, use of forward contracts, and settlements of the receivables. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Vikram
Transcribed Image Text:Tex Hardware sells many of its products overseas. The following are some selected transactions.
1. Tex sold electronic subassemblies to a firm in Denmark for 190,000 Danish kroner (Dkr) on June 6, when the exchange rate was Dkr
1= $0.1790. Collection was made on July 3 when the rate was Dkr 1 = $0.1793.
2. On July 22, Tex sold copper fittings to a company in London for £39,000 with payment due on September 20. Also, on July 22, Tex
entered into a 60-day forward contract to sell £39,000 at a forward rate of £1 = $1.630. The forward contract is not designated as a
hedge. The spot rates follow:
July 22
September 20
£1 =
£1 =
October 11
November 10
$1.580
$1.612
3. Tex sold storage devices to a Canadian firm for C$80,000 (Canadian dollars) on October 11, with payment due on November 10. On
October 11, Tex entered into a 30-day forward contract to sell Canadian dollars at a forward rate of C$1 = $0.730. The forward
contract is not designated as a hedge. The spot rates were as follows:
C$1 = $0.735
C$1 = $0.732
Required:
Prepare journal entries to record Tex's foreign sales of its products, use of forward contracts, and settlements of the receivables. (If no
entry is required for a transaction/event, select "No journal entry required" in the first account field.)
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