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Using Use the data given in Exercise 12-9, except assume that on November 1, Sitco Products entered into a 90-day forward contract to buy 900,000 Swedish kronas on January 30 for $.5085 per krona. Required: Prepare all necessary journal entries in regard to the forward contract.

Using Use the data given in Exercise 12-9, except assume that on November 1, Sitco Products entered into a 90-day forward contract to buy 900,000 Swedish kronas on January 30 for $.5085 per krona. Required: Prepare all necessary journal entries in regard to the forward contract.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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See below information from exercise 12-9

Journal Entries-Speculation Using a Forward Contract LO 5 Use the data given in Exercise 12-9, except assume that on November 1, Sitco Products entered into a 90-day forward contract to buy 900,000 Swedish kronas on January 30 for $.5085 per krona. Required: Prepare all necessary journal entries in regard to the forward contract.
Transcribed Image Text:Journal Entries-Speculation Using a Forward Contract LO 5 Use the data given in Exercise 12-9, except assume that on November 1, Sitco Products entered into a 90-day forward contract to buy 900,000 Swedish kronas on January 30 for $.5085 per krona. Required: Prepare all necessary journal entries in regard to the forward contract.
Using a Forward Contract LO 5 Journal Entries-Speculation Sharon Myers, chief finance officer for Sitco Products, convinced the president of the company to enter into a 90-day forward contract to sell 900,000 Swedish kronas as a speculative venture. When the forward contract was acquired on November 1, 2019, the spot rate for the krona was $.5045 and the 90-day future rate was $.5085. At December 31, 2019, the end of the firm's fiscal year, the spot rate was $.4981 and the future rate for kronas to be sold on January 30, 2020, was $.4996. On January 30, 2020, the spot rate was $.4826. Required: Prepare all necessary journal entries in regard to the forward contract.
Transcribed Image Text:Using a Forward Contract LO 5 Journal Entries-Speculation Sharon Myers, chief finance officer for Sitco Products, convinced the president of the company to enter into a 90-day forward contract to sell 900,000 Swedish kronas as a speculative venture. When the forward contract was acquired on November 1, 2019, the spot rate for the krona was $.5045 and the 90-day future rate was $.5085. At December 31, 2019, the end of the firm's fiscal year, the spot rate was $.4981 and the future rate for kronas to be sold on January 30, 2020, was $.4996. On January 30, 2020, the spot rate was $.4826. Required: Prepare all necessary journal entries in regard to the forward contract.
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