On November 1, 20x6, APIC Corporation sold merchandise to Allan Corporation on November 1, 20x6 for U.S. $50,000. Payment will be received on February 1, 20x7. APIC Corporation entered into forward exchange contracts to hedge the transaction on November 1, 20x6. The fiscal year-end for APIC Corporation is December 31. The exchange rates on various dates are as follows: November 1, 20x6 December 31, 20x6 February 1, 20x7 Spot rate 30-day forward rate 60-day forward rate 90-day forward rate P40.00 P40.25 P40.50 40.35 40.40 40.10 40.55 40,20 40.30 40.65 40.45 40.60 1. How much is the ForEx gain or (loss) on December 31, 20x6 with respect to accounts receivable? A. 2,500 C. (2,500)

On November 1, 20x6, APIC Corporation sold merchandise to Allan Corporation on November 1, 20x6 for U.S. $50,000. Payment will be received on February 1, 20x7. APIC Corporation entered into forward exchange contracts to hedge the transaction on November 1, 20x6. The fiscal year-end for APIC Corporation is December 31. The exchange rates on various dates are as follows: November 1, 20x6 December 31, 20x6 February 1, 20x7 Spot rate 30-day forward rate 60-day forward rate 90-day forward rate P40.00 P40.25 P40.50 40.35 40.40 40.10 40.55 40,20 40.30 40.65 40.45 40.60 1. How much is the ForEx gain or (loss) on December 31, 20x6 with respect to accounts receivable? A. 2,500 C. (2,500)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

On November 6, 20X7, Zebra Corporation purchased merchandise from an unaffiliated foreign company for 50,000 units of the foreign company's local currency. On that date, the spot rate was $1.259. Zebra paid the bill in full three months later when the spot rate was $1.258. The spot rate was $1.255 on December 31, 20X7. What amount should Zebra report as a foreign currency transaction gain in its income statement for the year ended December 31, 20X7? O $50 O $150 O $0 O $200 (1
Peerless Corporation (a U.S. company) made a sale to a foreign customer on September 15, for 100,000 crowns. It received payment on October 15. The following exchange rates for 1 crown apply: September 15 $0.60September 30 0.66October 15 0.62Prepare all journal entries for Peerless in connection with this sale, assuming that the company closes its books on September 30 to prepare interim financial statements.
On March 1, 20x1, ABC Co. sold inventory to a foreign company for FC 1,000,000 (FC means foreign currency) when the spot exchange rate is FC 40: ₱1. The payment is due on April 1, 20x1. ABC Co. is concerned about the possible fluctuation in exchange rates, so on this date, ABC Co. entered into a forward contract to sell FC 1,000,000 for ₱25,000 to a broker. According to the terms of the forward contract, if FC 1,000,000 is worth less than ₱25,000 on April 1, 20x1, ABC Co. shall receive from the broker the difference; if it is worth more than ₱25,000, ABC Co. shall pay the broker the difference. If the exchange rate on April 1, 20x1 is FC35: ₱1, how much is the net cash settlement? 3,571 receipt 3,571 payment 4,231 receipt 4,231 payment If the exchange rate on April 1, 20x1 is FC50: ₱1, how much is the net cash settlement? 5,000 payment 5,000 receipt 6,223 payment 6,223 receipt If the exchange rate on March 31, 20x1 is FC45: ₱1, how much is the fair value of the…
On September 1, 20x1, Creed Co. sold merchandise to a foreign enty for 250,000 francs. Terms of thesale require payment in francs on February 1, 20x2. On September 1, 20x1, the spot exchange rate wasPhp1.20 per franc. At December 31, 20x1, the spot rate was Php1.19, but the rate increased to Php1.22by February 1, 20x2, when payment was received. Requirement: Provide the journal entries in 20x1 and 20x2
On 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.
On December 1, Year 1, El Primero Company purchases inventory from a foreign supplier for 40,000 coronas. Payment will be made in 90 days after El Primero has sold this merchandise. Sales are made rather quickly, and El Primero pays this entire obligation on February 15, Year 2. The following exchange rates for 1 corona apply: Date U.S Dollar per Corona December 1, Year 1 $0.87 December 31, Year 1 $0.82 February 15, Year 2 $0.91 Required: Prepare all journal entries for El Primero in connection with the purchase and payment.
Peerless Corporation (a U.S. company) made a sale to a foreign customer on September 15, for 118,000 crowns. It received payment on October 15. The following exchange rates for 1 crown apply: September 15 $ .60 September 30 .66 October 15 .61 Prepare all journal entries for Peerless in connection with this sale, assuming that the company closes its books on September 30 to prepare interim financial statements. (If no entry is required for a transaction/event, select " No journal entry required" in the first account field.) 1 Record the entry for sales on credit. 2 Record the entry for changes in the exchange rate. 3 Record the entry for changes in the exchange rate. 4 Record the entry for receipt of payment.
On November 1, 20x2, Irvin Corp. sold goods to John Company for 130,000 rupee. Payment is due on March 30, 20x3. Also on November 1, 20x2, Irvin Corp. entered into a forward contract to sell 130,000 rupees on March 1, 20x3. The following are the exchange rates: Dec. 31, Nov. 1, 20x2 Mar. 30, 20x3 20x2 Spot rates 0.82 0.80 0.87 Forward rate 0.85 0.86 0.88 Irvin's incremental borrowing rate is 8%. What is the forex gain or loss on hedge item? 2,600 loss O 1,300 gain O 1,300 loss O 2,600 gain
Peerless Corporation (a U.S. company) made a sale to a foreign customer on September 15, for 121,000 crowns. It received payment on October 15. The following exchange rates for 1 crown apply: September 15 $ 0.60 September 30 0.66 October 15 0.61 Prepare all journal entries for Peerless in connection with this sale, assuming that the company closes its books on September 30 to prepare interim financial statements. (If no entry is required for a transaction/event, select " No journal entry required" in the first account field.)
On March 1, 20x1, ABC Co. sold inventory to a foreign company for FC 1,000,000 (FC meansforeign currency) when the spot exchange rate is FC 40: ₱1. The payment is due on April 1, 20x1.ABC Co. is concerned about the possible fluctuation in exchange rates, so on this date, ABC Co.entered into a forward contract to sell FC 1,000,000 for ₱25,000 to a broker. According to the termsof the forward contract, if FC 1,000,000 is worth less than ₱25,000 on April 1, 20x1, ABC Co. shallreceive from the broker the difference; if it is worth more than ₱25,000, ABC Co. shall pay the brokerthe difference. If the exchange rate on April 1, 20x1 is FC35: ₱1, how much is the net cash settlement? a. 3,571 receipt b. 3,571 payment c. 4,231 receipt d. 4,231 payment
Tara Corporation issued a promissory note denominated in foreign currency for the purchase made from a supplierin England on December 1, for a 60-day, 12% promissory note for 100,000 pounds, at a selling rate of 1FC to P65.50. OnDecember 31, the selling spot rate is 1FC to P64.80. On January 30, the selling spot rate is 1FC to P65.45On the settlement date, how much is the foreign exchange loss?
8. Assume that your company purchases inventories from a supplier on December 15. The invoice specifies that payment is to be made on March 15 in Euros in the amount of 10,000 Euros. Your company operates on a calendar year basis. Assume the following exchange rates and the company does not enter into any hedging arrangements: December 15 $1.35 :1 Euro December 31 $1.37 :1 Euro March 15 $1.38 :1 Euro Requirement: Prepare the journal entry that needs to be made on March 15

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS