ADV.FIN.ACCT.LL W/CONNECT+PROCTORIO PLUS
12th Edition
ISBN: 9781266380570
Author: Christensen
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 11, Problem 11.20.1P
To determine
Introduction: Foreign exchange rate is the rate at which currency of one country is changed to currency of another country is called foreign exchange rate. Mainly there are two rate, i.e. direct exchange rate and indirect exchange rate.
Foreign exchange gain or loss: Foreign exchange gain or loss arises when there is selling or buying of any goods and services in foreign currency.
Forward contract: It is the contract between the purchase and the seller where they agreed to buy or sell an asset at a fixed price in the future on a specific date.
The recording of the journal entries as on November 1, 20X8.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Hedging Receivables with a forward contract
On December 15, the Chiquita Company, a company based in Ecuador, sells bananas to a company in Italy and expects to receive 1 million euro on March 15. The currency used in Ecuador is the US dollar. On December 15, Chiquita hedges the receivable with a forward contract with a delivery date of March 15.
On December 15, the following are quotes for the euro.
Bid
Ask
Spot Rate
$1.07
$1.08
Forward Rate
$1.11
$1.12
The forward rate is for a forward contract with a March 15 delivery date.
On March 15, the following are quotes for the euro.
Bid
Ask
Spot Rate
$1.12
$1.13
Forward Rate
$1.12
$1.13
The forward rate is for a forward contract with a March 15 delivery date.
What is Chiquita’s net cash flow in dollars on December 15? On March 15?
Do not combine cash flows from different dates. For all cash flows, make sure you state the date of the cash flow. Show how you calculated your answers.
Subject :- Accounting
Answer the attached question
Chapter 11 Solutions
ADV.FIN.ACCT.LL W/CONNECT+PROCTORIO PLUS
Ch. 11 - Prob. 11.1QCh. 11 - Prob. 11.2QCh. 11 - The U.S. dollar strengthened against the European...Ch. 11 - Prob. 11.4QCh. 11 - Prob. 11.5QCh. 11 - How are assets and liabilities denominated in a...Ch. 11 - Prob. 11.7QCh. 11 - Prob. 11.8QCh. 11 - Prob. 11.9QCh. 11 - Distinguish between an exposed net asset position...
Ch. 11 - Prob. 11.11QCh. 11 - Prob. 11.12QCh. 11 - Effects of Changing Exchange Rates Analysis Since...Ch. 11 - Prob. 11.2CCh. 11 - Prob. 11.5CCh. 11 - Prob. 11.1ECh. 11 - Prob. 11.2ECh. 11 - Basic Understanding of Foreign Exposure The...Ch. 11 - Prob. 11.5ECh. 11 - Prob. 11.6ECh. 11 - Prob. 11.7ECh. 11 - Adjusting Entries for Foreign Currency Balances...Ch. 11 - Prob. 11.9ECh. 11 - Prob. 11.10ECh. 11 - Prob. 11.11.1ECh. 11 - Prob. 11.11.2ECh. 11 - Prob. 11.11.3ECh. 11 - Prob. 11.11.4ECh. 11 - Prob. 11.11.5ECh. 11 - Prob. 11.11.6ECh. 11 - Prob. 11.11.7ECh. 11 - Prob. 11.12ECh. 11 - Prob. 11.13ECh. 11 - Prob. 11.14.1ECh. 11 - Foreign Currency Transactions [AICPA Adapted]...Ch. 11 - Prob. 11.14.3ECh. 11 - Prob. 11.14.4ECh. 11 - Prob. 11.14.5ECh. 11 - Foreign Currency Transactions [AICPA Adapted]...Ch. 11 - Prob. 11.14.7ECh. 11 - Prob. 11.15ECh. 11 - Prob. 11.16AECh. 11 - Prob. 11.17ECh. 11 - Prob. 11.18ECh. 11 - Prob. 11.19.1ECh. 11 - Prob. 11.19.2ECh. 11 - Prob. 11.19.3ECh. 11 - Prob. 11.19.4ECh. 11 - Prob. 11.19.5ECh. 11 - Prob. 11.20.1PCh. 11 - Prob. 11.20.2PCh. 11 - Prob. 11.20.3PCh. 11 - Prob. 11.20.4PCh. 11 - Prob. 11.20.5PCh. 11 - Foreign Sales Tex Hardware sells many of its...Ch. 11 - Prob. 11.22PCh. 11 - Prob. 11.23.1PCh. 11 - Prob. 11.23.2PCh. 11 - Prob. 11.24PCh. 11 - Prob. 11.25PCh. 11 - Prob. 11.26PCh. 11 - Prob. 11.27.1PCh. 11 - Prob. 11.27.2PCh. 11 - Prob. 11.27.3PCh. 11 - Prob. 11.28APCh. 11 - Prob. 11.29.1BPCh. 11 - Prob. 11.29.2BPCh. 11 - Prob. 11.29.3BPCh. 11 - Prob. 11.29.4BPCh. 11 - Prob. 11.29.5BPCh. 11 - Prob. 11.29.6BPCh. 11 - Prob. 11.30BPCh. 11 - Prob. 11.31BPCh. 11 - Matching Key Terms Match the items in the lefthand...
Knowledge Booster
Similar questions
- = Iberico plc, a Spanish firm whose functional currency is EUR, sold goods to a British customer for 10,000 GBP on credit. The exchange rate on the date of sale was 1 GBP : 1.2 EUR. Which the journal entry shall Iberico plc prepare regarding the sale? Question 6 Select one: a. DR Cash 12,000 EUR, CR Sale 12, 000 EUR b. DR Cash 10,000 GBP, CR Sale 10,000 GBP c. DR Receivable 10,000 GBP, CR Sale 10,000 GBP d. DR Receivable 12,000 EUR, CR Sale 12,000 EURarrow_forward(a) ABC Co has a year end of 31 December 20X1 and uses the dollar ($) as its functional currency. On 25 October 20X1 ABC Co buys goods from a Swedish supplier for Swedish Krona (SWK) 286,000. Rates of exchange: 25 October 20X1 $1 = SWK 11.16 16 November 20X1 $1 = SWK 10.87 31 December 20X1 $1 = SWK 11.02 Required: Show the accounting treatment for the above transactions if: (a) A payment of SWK286,000 is made on 16 November 20X1. (b) The amount owed remains outstanding at the year-end date.arrow_forwardOn June 1 Hitch Company sold goods to a foreign customer at a price of 15,000 Foreign Currency Units Hitch will receive payment in three months on September 1st. On June 1, Hitch entered into a forward contract maturing on September 1 as a fair value hedge of its FCU receivable. Prepare all journal entries, including adjusting entries, to record the transaction and the forward contract for Hitch. Date Spot rate Forward Rate* June 1 $0.30 $0.33 June 30 $0.32 $0.32 Spet 1 $0.34 Hitch closes its books on June 30 of every year. *Forward rate is for a contract written on June 1 to mature on September 1. First, prepare entries for the sale and receivable. Then, prepare the entries for the forward contract hedge. Finally, amortize any forward premium or discount to income using OCI, other comprehensive income.arrow_forward
- Full conceptarrow_forwardForeign currency transactions Use the following information for the next two questions: On December 1, 20x1, Entity A sells good to Entity B, on credit, for a total sale price of $1,000. Entity B settles the account on January 6, 20x1. Entity A's functional currency is the Philippine peso (P). The relevant exchange rate are as follows: Dec. 1, 20x1 Dec. 31, 20x1 Jan. 6, 20x1 P50:$1 P52:$1 P41:$1 How much is the foreign exchange gain (loss) to be recognized by Entity A on December 31, 20x1?arrow_forwardOn December 1, 20x1, you imported a machine from a foreign supplier for $100,000, due for settlement on January 6, 20x2. Your functional currency is the Philippine peso. When preparing the December 31, 20x1 statement of financial position, which of the following will you translate to the closing rate? * accounts payable machine machine and accounts payable no item(s) will be translatedarrow_forward
- (b) White Cliffs Co, whose year-end is 31 December, buys some goods from Rinka SA of France on 30 September. The invoice value is €40,000 and is due for settlement in equal instalments on 30 November and 31 January. The exchange rate moved as follows. € to $1 |30 September 30 November 1.60 | 1.80 31 December 31 January 1.90 1.85 Required State the accounting entries in the books of White Cliffs Co.arrow_forwardOn December 1, 2012, Pateros Corporation sold furniture's to Singapore Company. The selling price of 4,000 Sing Dollars is to be settled in Sing Dollars on March 1, 2013. The following exchange rates applied: Pateros Company engaged in a forward contract with Citibank to sell the 4,000 Sing Dollars in 90 days. Spot rate Forward rate P22 (90 day) 12/1/12 P26 12/31/12 P24 P23 (60 day) 3/1/13 P21 P21 How much is the balance of the Forward Contract Receivable on December 31, 2012? A. P 88,000 B. P 96,000 C. P 92,000 D. P104,000arrow_forwardPlease Solve In 10mins I will Thumbs-uparrow_forward
- On December 1, Y1, AAA, a US based company, entered into a three months forward contract to purchase 1 million foreign currency FC, on March 1, Y2. The following US per FC exchange rates apply: Date Spot Rate Forward Rate December 1, Y1 $0.088 $0.084 December 31, Y1 $ 0.080 $0.074 March 1, Y2 $0.076 AAA borrowing rate is 12%. The present value factor for 2 months at an annual rate is 0.9803. How would AAA report the forward contract on its balance sheet on December 31, Y1? Justify your answer and show your calculations. 3 pts As a liability of 9,803. 1,000,000 x (0.084-0.074) = 10,000 x 0.9803 = 9803arrow_forward8. Clark Stone purchases raw material from its foreign supplier, Rinne Clay, on May 8. Payment of 1,500,000 foreign currency units (FC) is due in 30 days. May 31 is Clark's fiscal year-end. The pertinent exchange rates were as follows: May 8 May 31 June 7 Spot rate: $1.16 Spot rate:$1.18 Spot rate: $1.12 For what amount should Clark's Accounts Payable be credited on May 8? a. $1,680,000. b. $1,850,000. c. $1,740,000. d. $1,500,000. e. $1,770,000. in hearrow_forwardSTARLA Company sold merchandise for 30,000 pounds to a customer in London on December 1, 2020. Payment inBritish pounds was due on March 31, 2021. On the same date, the company entered into a 120-day forward contract tosell 30,000 pounds to Central City Bank. Exchange rates for one pound on different dates are as follows: December 1 December 31 March 31Spot rates 81.4 82.3 82.030-day forward 82.3 82.9 83.260-day forward 82.8 82.7 82.690-day forward 81.6 82.6 83.4 120-day forward 82.5 82.8 82.5How much…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
