None 1333pointsOn October 1, 2024, Richmond Company sold Inventory to a customer in a foreign country, denominated In 100,000 local currency units. Collection is expected in four months. On October 1, 2024, a forward exchange contract wasacquired whereby Richmond was to pay 100,000 local currency units in four months (on February 1, 2025) and receive $86,000 in U.S. dollars. The spot and forward rates for the local currency units were as follows:Exchange RateDateRate DescriptionOctober 1, 2024December 31, 2024Spot RateSpot Rate01:24:45February 1, 20251-Month Forward RateSpot Rate$ 0.91 = 1 local currency unit$ 0.93 = 1 local currency unit$ 0.88 1 local currency unit$ 0.94 = 1 local currency unitAny discount or premium on the forward contract is amortized using the straight-line method.Required:Assuming this is a cash flow hedge, prepare journal entries for this sales transaction and forward contract.This question is worth 33 points. Please include all the entries for this question and explain any calculations. Thank you

October 1, 2024Sales Transaction:We recognize the sale by debiting Accounts Receivable for the local…

Answered: 13 33 points On October 1, 2024,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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On October 1, 2024, Richmond Company sold inventory to a customer in a foreign country, denominated in 100,000 local currency units. Collection is expected in four months. On October 1, 2024, a forward exchange contract was acquired whereby Richmond was to pay 100,000 local currency units in four months (on February 1, 2025) and receive $86,000 in U.S. dollars. The spot and forward rates for the local currency units were as follows: Date Rate Description Exchange Rate October 1, 2024 Spot Rate $ 0.91 1 local currency unit December 31, 2024 Spot Rate $ 0.93 1 local currency unit February 1, 2025 1-Month Forward Rate Spot Rate $ 0.88 1 local currency unit $ 0.94 1 local currency unit Any discount or premium on the forward contract is amortized using the straight-line method. Required: Assuming this is a cash flow hedge, prepare journal entries for this sales transaction and forward contract.
8. 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 he
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: Маy 8 Мay 31 Spot rate: $1.16 Spot rate: $1.18 Spot rate: $1.12 June 7 For what amount should Clark's Accounts Payable be credited on May 8? Multiple Choice $1,770,000. $1,680,000. $1,740,000. $1,850,000. $1,500,000.
2 XYZ Company sells goods to a foreign customer on June 8. Payment of 3,000,000 foreign currency units (FC) is due in one month. June 30 is XYZ Company’s fiscal year-end. The following exchange rates were in effect during the period: June 8 Spot rate $1.10 June 8 30 day forward rate $1.15 June 30 Spot rate $1.14 July 8 Spot rate $1.20 A For what amount should XYZ Accounts Receivable be debited on June 8 B How much foreign exchange gain or loss should XYZ record on June 30
On December 20, 2023, Momeler Company (a U.S.-based company) sold parts to a foreign customer at a price of 195,000 rials. Payment is received on January 10, 2024. Currency exchange rates are as follows: Date December 20, 2023 December 31, 2023 January 10, 2024 U.S. Dollar per Rial. a. The rial receivable exchange b. The nial receivable exchange $1.29 1.26 1.22 Required: a. How does the fluctuation in the U.S. dollar per rial exchange rate affect Momeler's 2023 income statement? b. How does the fluctuation in the U.S. dollar per rial exchange rate affect Momeier's 2024 income statement? in U.S. dollar value, resulting in a foreign of in 2023 in U.S. dollar value, resulting in a foreign of in 2024
Voltac Corporation (a US-based company) has the following import/export transactions denominated in Mexican pesos in 2020: March 1 May 1 August 1 September 1 Bought inventory costing 124,000 pesos on credit. Sold 80 percent of the inventory for 104,000 pesos on credit. Collected 82,000 pesos from customers. Peid 72,000 pesos to suppliers. Currency exchange rates for 1 peso for 2020 are as follows: Date March 1 May 1 August 1 September 1 December 31 U.B. Dollar рег Реко $ 0.22 0.23 0.24 0.25 0.26 Assume that all receipts were converted into dollars as soon as they were received. For each of the following accounts, what amount will Voltac report on its 2020 financial statements? Inventory b Cost of goods sold c Sales d Accounts receivable e Accounts payable Cash
STARLA 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…
On 2nd March 2022 Star Exporters have received export order for USD 2 million for shipment to Germany between 15th March to 30th March 2022. The letter of credit to that extent was received by the exporters and the documents were required to be submitted within 15 days from the date of shipment. The payment terms are 90 days sight. Rates on 2nd March 2022 (Spot Date 6th March 2022) are as follows: Spot USD 44.3500 / 44.3800 Forward July 45/46 When bank is quoting as above it means, the bank would buy at ___ Rate and Sell at ___ Rate a. Spot, Ask b. Bid, Spot c. Spot, Forward d. Bid, Ask
Voltac Corporation (a U.S.-based company) has the following import/export transactions denominated in Mexican pesos in 2020: Bought inventory costing 116,000 pesos on credit. March 1 May 1 August 1 September 1 Sold 60 percent of the inventory for 96,000 pesos on credit. Collected 78,000 pesos from customers. Paid 68,000 pesos to suppliers. Currency exchange rates for 1 peso for 2020 are as follows: Date March 1 May 1 August 1 September 1 December 31 Assume that all receipts were converted into dollars as soon as they were received. For each of the following accounts, what amount will Voltac report on its 2020 financial statements? a b C d Inventory Cost of goods sold Sales Accounts receivable U.S. Dollar per Peso $ 0.25 0.26 0.27 0.28 0.29 e Accounts payable f Cash
IIllustration One Wazalendo Company is a Tanzanian company with exports and imports trade with the United Kingdom [UK] and the United States of America [USA]. The following transactions, in the currency specified, are due within the next six months: • Purchase of goods from UK, cash payment due in three months £15,500 • Sale of goods purchased from UK to a USA customer, cash receipts due in 6 months US$ 29,000 • Purchase of goods from USA, cash payment due in three months US$ 150,000 • Sale of goods purchased from USA to a UK customer, cash receipts due in 6 months £75,000 The spot and forward exchange rates are as follows: TZS/UK £ TZS/US$ Spot 2,600-2,700 1,350-1,360 Three months forward 2,750-2,800 1,400-1,450 Six months forward 2,850-2,900 1,550-1,600 Required: Determine the profit or loss to be made by Wazalendo Company on the import-export business assuming that the company arranges to cover the transactions in the forward market.
On November 1, 2019, Flower Company, a U.S. company, entered into a four-month forward contract to sell 50,000 liras on February 1, 2020. The following U.S. dollar per lira exchange rates apply: Date Spot rate Forward Rate (to Feb 1st 2020) November 1, 2019 $0.092 $0.105 December 31, 2019 $0.090 $0.095 February 1, 2020 $0.089 N/A    Flower's incremental borrowing rate is 12 percent. The present value factor for two months at an annual interest rate of 12 percent is .9803. Which of the following is included in Flower's December 31, 2019 balance sheet for the forward contract?
Voltac Corporation (a U.S.-based company) has the following import/export transactions denominated in Mexican pesos in 2020: Bought inventory costing 100,000 pesos on credit. March 1 May 1 August 1 September 1 Sold 60 percent of the inventory for 80,000 pesos on credit. Collected 70,000 pesos from customers. Paid 60,000 pesos to suppliers. Currency exchange rates for 1 peso for 2020 are as follows: Date March 1 May 1 August 1 September 1 December 31 Assume that all receipts were converted into dollars as soon as they were received. For each of the following accounts, what amount will Voltac report on its 2020 financial statements? Inventory Cost of goods sold с Sales d Accounts receivable e Accounts payable Cash U.S. Dollar per Peso $ 0.10 0.12 0.13 0.14 0.15 a b

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