Charin Corporation, a U.S. corporation, imports and exports small electronics. On December 1, 2014, Charin purchased components from an Egyptian manufacturer amounting to 500,000 Egyptian pounds. The purchase is payable in Egyptian pounds. At December 30, Charin wanted to take advantage of favorable exchange rates but did not have the full amount required to pay off the entire amount. Charin wired the funds to pay off half of the balance owed and expected to pay the remaining balance on January 3, 2015. Charin paid the remaining balance on January 3, 2015.   The respective exchange rates were as follows: December 1, 2014         1 pound = $.170 December 30, 2014       1 pound = $.165 December 31, 2014       1 pound = $.175 January 3, 2015             1 pound = $.180   Document the journal entries related to these transactions for the four dates shown. If no entry is required, record "no entry."

Brandlin company of anaheim, california, sells parts to a foreign customer on december 1, 2017, with payment of 24,000 korunas to be received on march 1, 2018. Brandlin enters into a forward contact on december 1, 2017 to sell 24,000 korunas on march 1, 2018. Relevant exchange rates for the korunas on various dates are as follow: date                                spot rate                 forward rate december 1, 2017           4.20                          4.275 december 31, 2017         4.30                           4.400 march 1, 2018                  4.45                            n/a   brandli's incremental borrowing rate is 12 percent. The present value factor for two months at annual interest rate of 12 percent  (1 percent per month) is 0.9803. Brandlin must close its books and prepare financial statements at december 31. 1. Assuming that brandlin designates the forward contract as a cash flow hedge of a foreign currency receivable and recognizes any premium or discount…

Spindler, Inc. (a U.S.-based company), imports surfboards from a supplier in Brazil and sells them in the United States. Purchases are denominated in terms of the Brazilian real (BRL). During 2020, Spindler acquires 420 surfboards at a price of BRL 1,600 per surfboard, for a total of BRL 672,000.00. Spindler will pay for the surfboards when it sells them. Relevant exchange rates are as follows:   Date U.S. Dollar perBrazilian Real (BRL)   September 1, 2020 $ 0.230   December 1, 2020   0.220   December 31, 2020   0.240   March 1, 2021   0.225       Assume that Spindler acquired the surfboards on September 1, 2020, and made payment on December 1, 2020. What is the effect of the exchange rate fluctuations on reported income in 2020? Assume that Spindler acquired the surfboards on December 1, 2020, and made payment on March 1, 2021. What is the effect of the exchange rate fluctuations on reported income in 2020 and 2021? Assume that Spindler acquired the surfboards on…

Banana, Inc. is a U.S.-based manufacturer and wholesaler.  On 10/15/20x1, Banana made its first international sale.  They sold $450,000 of products to a non-U.S. customer. Banana, Inc. agreed to allow the customer to pay for the purchase in its own currency, the FC.  To avoid a penalty, the foreign buyer must make payment to Banana by February 2, 20x2.  At the time of the sale, the FC/$ spot rate was FC1.97=$1   Banana, Inc. has a December 31 year-end.  At 12/31/20x1, the foreign currency spot rate was FC1.95 = $1. Required: Give the journal entries for the receipt of payment on the sale on 2/2/20x2. At that date, the foreign currency spot rate was FC 2.00 = $1.

Chinook, Inc. purchases components from a Japanese company that requires payment in yen (Y); it sells finished products to a German company that pays in euros. On June 1, Chinook ordered components from the Japanese Company costing Y6,890,000 and sold finished goods to the German company with a selling price of $150,000 to be paid in euros. The June 1 spot rates of U.S. dollars for yen and for euros was:  $1 = Y106.0 $1 = E0.84 Required: 1. What is the cost of the Y6,890,000 in dollars? 2. How many euros will Chinook receive from the German company in payment for the finished product? 3. What if the exchange rate of dollars for yen was $1 = Y108? What is the cost of the Y6,890,000 in dollars (rounded to the nearest dollar)?

Vitamin, Inc. is a U.S.-based manufacturer and wholesaler.  On 10/15/20x1, Almira made its first international sale.  They sold $450,000 of products to a non-U.S. customer. Vitamin, Inc. agreed to allow the customer to pay for the purchase in its own currency, the FC.  To avoid a penalty, the foreign buyer must make payment to Vitamin by February 2, 20x2.  At the time of the sale, the FC/$ spot rate was FC1.97=$1   Vitamin, Inc. has a December 31 year-end.  At 12/31/20x1, the foreign currency spot rate was FC1.95 = $1. Required: Explain how Vitamin, Inc. can use: (a) forward exchange contracts and (b) foreign exchange options their foreign currency risk. In your explanation, discuss the type of: (a) forward exchange contract or (b) foreign currency option contracts, they would obtain to hedge their foreign currency risk. No journal entries are required. For Vitamin, Inc.’s foreign customer, explain the type of foreign currency risk the s/he accepts relating to their purchase from…