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- Flynn Corporation purchased bicycles from a British manufacturer at a price of 45,000 British pounds on November 15, Year 1with payment due in 60 daysUsing the following exchange rateswhat gain or loss from currency fluctuations should be recognized in Year 1 and Year 2 respectively? Nov. 15, Year 1 1.70 per British pound Dec. 31, Year 1 1.75 per British pound Jan. 15, Year 2 $1.73 per British poundForeign currency transactions Melbourne Ltd purchased goods from France on 3 April 2022 on credit shipped FOB Paris. The cost of good is Euro 500,000 and outstanding as of 31 April 2021. On 3 April 2022, the exchange rate is A$1.00 = Euro 0.67. On 30 April 2022, exchange rate is A$1.00 = Euro 0.66 REQUIRED Provide the accounting entries necessary to account for the above purchase transaction for the month ending 30 April 2022.The U.S. Company purchased Laptop from a company domiciles in japan. The contract was denominated in 600,000 Japan Yen. The direct exchange spot rate on this date was $0.0844. Select one: a. None of the other points $650,000 $650,000 b. Purchases Cash c. Purchases $650,000 Account Payable $650,000 $50,640 O d. Purchases Account Payable $50,640
- On 1 July 2018 an Australian company lent to its New Zealand subsidiary an amount of NZ$2.5 million for a period of six years. At the time the exchange rate was A$1 5 NZ$1.13. Assume the exchange rate was A$1 5 NZ$1.09 on 30 June 2019, while on 30 June 2020 the exchange rate was A$1 5 NZ$1.02. Required Prepare the general journal entries to record the above events for the first two years of the loan, following the requirements of AASB 121. Be careful to specify any assumptions you make. (Lo2, Lo3)On December 12, 20X5, Dahl Company entered into three forward exchange contracts, each to purchase 100,000 francs in 90 days. The relevant exchange rates are as follows: Spot Rate Forward Rate for March 12, 20X6 December 12, 20X5 $ 0.88 $ 0.90 December 31, 20X5 0.98 0.93 3. Dahl entered into the first forward contract to manage the foreign currency risk from a purchase of inventory in November 20X5, payable in March 20X6. The forward contract is not designated as a hedge. At December 31, 20X5, what amount of foreign currency transaction gain should Dahl include in income from this forward contract? multiple choice $10,000 $0 $5,000 $3,000 4. Dahl entered into the second forward contract to hedge a commitment to purchase equipment being manufactured to Dahl’s specifications. At December 31, 20X5, what amount of foreign currency transaction gain should Dahl include in income from this forward contract? multiple choice $10,000 $0 $5,000…A Canadian corporation (ACC) has just entered into a two-year currency swap contract with Big Dealer Bank (BDB). The swap contract requires ACC to make semi-annual payments in Canadian dollars (C$) and receive semi-annual payments in U.S. dollars (US$). The notional amount in Canadian dollars is C$25 million. The accrual period for the swap is 180/360, assuming 360 days per year. The US$/C$ spot exchange rate is 0.77, with the Canadian dollar being the domestic currency for ACC. The term structures of C$ LIBOR and US$ LIBOR are as follows: Days C$ LIBOR (%) US$ LIBOR (%) 180 0.50 0.55 360 0.60 0.65 540 0.65 0.75 720 0.70 0.85 a. What is the notional amount in U.S. dollars? b. Calculate the fixed rates in Canadian and U.S. dollars.
- On December 12, 20X5, Dahl Company entered into three forward exchange contracts, each to purchase 100,000 francs in 90 days. The relevant exchange rates are as follows: Spot Rate Forward Rate for March 12, 20X6 December 12, 20X5 $ 0.88 $ 0.90 December 31, 20X5 0.98 0.93 1. The following information applies to Denton Incorporated’s sale of 10,000 foreign currency units under a forward contract dated November 1, 20X5, for delivery on January 31, 20X6: 11/1/X5 12/31/X5 Spot rates $ 0.80 $ 0.83 30-day forward rate 0.79 0.82 90-day forward rate 0.78 0.81 1. Denton entered into the forward contract to speculate in the foreign currency. In its income statement for the year ended December 31, 20X5, what amount of loss should Denton report from this forward contract? multiple choice $400 $300 $200 $0 2. On September 1, 20X5, Johnson Incorporated entered into a foreign exchange contract for speculative purposes by purchasing €50,000 for…Upon arrival at the international airport in the country of Canteberry, Charles Alt exchanged $340 of U.S. currency into 850 florins, the local currency unit. Upon departure from Canteberry's international airport on completion of his business, he exchanged his remaining 110 florins into $33 of U.S. currency. Required: a. Determine the currency exchange rates for each of the cells in the following matrix for Charles Alt's business trip to Canteberry. (Round your answers to 2 decimal places.) fl= florins Direct exchange rate Indirect exchange rate fl Foreign currency transaction Arrival Date fl Departure Date c. Did Charles experience a foreign currency transaction gain or a loss on the 110 florins he held during his visit to Canteberry and converted to U.S. dollars at the departure date? (Round your intermediate computations and final answers to two decimal places)During December of the current year, Exide company based in America, entered into the following transactions; Dec 10 Sold machinery to company located in Colombia for 6,500,000 pesos. On this date, the spot rate was 365 pesos per U.S. Dollar. Dec 12 Purchased Machine parts from a company domiciled in Japan. The contract was denominated in 600,000 Japan yen. The direct exchange spot rate on this date was $.0392. Required: Prepare journal entries to record the transactions above on the books of Exide company. The company uses a periodic inventory system. Prepare journal entries necessary to adjust the accounts as of December 31. Assume that on December 31 the direct exchange rates were as follows: Colombia peso $.00265 Japan yen .0353 Prepare journal entries to record settlement of both open accounts on January 10. Assume that the direct exchange rates on the settlement dates were as follows:…
- Journal entries for an account payable denominated in Mexican Pesos ($US weakens and strengthens) Assume that your company purchases inventories from a Mexican supplier on December 15. The invoice specifies that payment is to be made on March 15 in Mexican Pesos (Peso) in the amount of 350,000 Pesos. Your company operates on a calendar year basis. Assume the following exchange rates: December 15 $0.046:1 Peso December 31 $0.053:1 Peso March 15 $0.050:1 Peso Prepare the journal entries to record the purchase (assume perpetual inventory accounting), the required adjusting entry at December 31, and the payment on March 15. General Journal Date Description Debit Credit Accounts payable Accounts payable Dec 15 Inventory Dec 31 Foreign currency transaction loss Mar 15 Accounts payable ÷ 16,100 0 0 16,100 2,450 0 0 2,450 28,000 × 0 Foreign currency transaction gain 0 10,500 x Cash 0 17,500On December 1, Year 1, Triaxal Incorporation enters into a forward contract to sell one million Philippines pesos (PP) to its bank in exchange for Canadian dollars on March 1, Year 2, at the market rate for a 90-day forward contract of PP1=$0.0227. On December 31, Year 1, Triaxal’s year-end, the 60-day forward rate to sell Philippines pesos on March 1 is quoted at PP1=$0.0222. On March 1, Year 2, the currencies are exchanged when the spot rate is PP1=$0.0220. Required Prepare journal entries for speculative forward contract under Gross Method and Net Method.Icebreaker Company (a U.S.-based company) purchases materials from a foreign supplier on December 1, 2020, with payment of 23,000 dinars to be made on March 1, 2021. The materials are consumed immediately and recognized as cost of goods sold at the date of purchase. On December 1, 2020, Icebreaker enters into a forward contract to purchase 23,000 dinars on March 1, 2021. Relevant exchange rates for the dinar on various dates are as follows: Date Spot Rate Forward Rate(to March 1, 2021) December 1, 2020 $ 4.10 $ 4.175 December 31, 2020 4.20 4.300 March 1, 2021 4.35 N/A a-1. Assuming that Icebreaker designates the forward contract as a cash flow hedge of a foreign currency payable, prepare journal entries for the import purchase and foreign currency forward contract in U.S. dollars. a-2. What is the impact on 2020 net income? a-3. What is the impact on 2021 net income? a-4. What is the impact on net income over the two accounting periods?…
