Hedged Forecasted Purchase Constellation Brands, a U.S. company, purchases merchandise from a German supplier on a regular basis. On April 1, 2016, Constellation purchased €10,500 for delivery on June 30, 2016, in anticipation of an expected purchase of merchandise for €10,500 at the end of June. The forward contract was a qualified hedge of a forecasted transaction. Constellation took delivery of the merchandise, settled the forward contract, and paid the German supplier €10,500 on June 30, 2016. The merchandise was subsequently sold in the U.S. on July 12, 2016, for $14,250 in cash. Relevant exchange rates ($/€) are as follows: April 1, 2016 Spot rate $1.32 June 30, 2016 1.36 Forward rate for delivery June 30, 2016 $1.30

Hedged Forecasted Purchase Constellation Brands, a U.S. company, purchases merchandise from a German supplier on a regular basis. On April 1, 2016, Constellation purchased €10,500 for delivery on June 30, 2016, in anticipation of an expected purchase of merchandise for €10,500 at the end of June. The forward contract was a qualified hedge of a forecasted transaction. Constellation took delivery of the merchandise, settled the forward contract, and paid the German supplier €10,500 on June 30, 2016. The merchandise was subsequently sold in the U.S. on July 12, 2016, for $14,250 in cash. Relevant exchange rates ($/€) are as follows: April 1, 2016 Spot rate $1.32 June 30, 2016 1.36 Forward rate for delivery June 30, 2016 $1.30

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter13: Marketable Securities And Derivatives

Section: Chapter Questions

Problem 22E

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Constellation Brands, a U.S. company, purchases merchandise from a German supplier on a regular basis. On April 1, 2016, Constellation purchased €31,500 for delivery on June 30, 2016, in anticipation of an expected purchase of merchandise for €31,500 at the end of June. The forward contract was a qualified hedge of a forecasted transaction. Constellation took delivery of the merchandise, settled the forward contract, and paid the German supplier €31,500 on June 30, 2016. The merchandise was subsequently sold in the U.S. on July 12, 2016, for $42,750 in cash. Relevant exchange rates ($/€) are as follows: PLEASE USE THE GENERAL JOURNAL PROVIDED FOR NECESSARY ENTRIES Spot rate Forward rate for deliveryJune 30, 2016 April 1, 2016 $ 1.34 $1.32 June 30, 2016 1.38 -- Prepare the journal entries made by Constellation Brands on June 30 and July 12 concerning the above events. Assume Constellation Brands is a calendar-year company and records cost of goods sold at the time of sale.…
Constellation Brands, a U.S. company, purchases merchandise from a German supplier on a regular basis. On April 1, 2016, Constellation purchased €10,500 for delivery on June 30, 2016, in anticipation of an expected purchase of merchandise for €10,500 at the end of June. The forward contract was a qualified hedge of a forecasted transaction. Constellation took delivery of the merchandise, settled the forward contract, and paid the German supplier €10,500 on June 30, 2016. The merchandise was subsequently sold in the U.S. on July 12, 2016, for $14,250 in cash. Relevant exchange rates ($/€) are as follows: Spot rate Forward rate for deliveryJune 30, 2016 April 1, 2016 $ 1.32 $1.30 June 30, 2016 1.36 -- Prepare the journal entries made by Constellation Brands on June 30 and July 12 concerning the above events. Assume Constellation Brands is a calendar-year company, and records cost of goods sold at the time of sale. General Journal Date Description Debit Credit…
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