AS PER HOMEWORKLIB POLICY I'VE ANSWERED 1ST FOUR PARTS OF THE QUESTION. KINDLY POST REMAINING PARTS SEPERATELY. THANK YOU!
Part a)
The journal entries are as follows:
Date | Account Titles | Debit | Credit |
Sep. 15 | Inventory | $276,000 | |
Accounts Payable (Euro) | $276,000 | ||
Sep. 30 | Foreign Exchange Loss | $13,800 | |
Accounts Payable (Euro) | (276000*(1.20-1.15) | $13,800 | |
Oct. 31 | Foreign Exchange Loss | $13,800 | |
Accounts Payable (Euro) | $13,800 | ||
Foreign Currency (Euro) | $303,600 | ||
Cash | $303,600 | ||
Accounts Payable (Euro) | $303,600 | ||
Foreign Currency (Euro) | $303,600 |
_____
Part b)
The journal entries are as follows:
Date | Account Titles | Debit | Credit |
Sep. 15 | Inventory | $276,000 | |
Accounts Payable (Euro) | $276,000 | ||
No Journal Entry for Forward Contract | |||
Sep. 30 | Foreign Exchange Loss | $13,800 | |
Accounts Payable (Euro) | $13,800 | ||
Forward Contract | $8,213.76 | ||
Gain on Forward Contract [(276,000 *1.24 - 276,000 *1.21)*.992] | $8,213.76 | ||
Oct. 31 | Foreign Exchange Loss | $13,800 | |
Accounts Payable (Euro) | $13,800 | ||
Forward Contract | $2,826.24 | ||
Gain on Forward Contract [(276,000 *1.25 – 276,000 *1.21) - 8,213.76] | $2,826.24 | ||
Foreign Currency (Euro) | $303,600 | ||
Cash | $292,560 | ||
Forward Contract | $11,040 | ||
Accounts Payable (Euro) | $303,600 | ||
Foreign Currency (Euro) | $303,600 |
_____
Part c)
The journal entries are given as below:
Date | Account Titles | Debit | Credit |
Sep. 15 | No Journal Entry for Forward Contract | ||
Sep. 30 | Forward Contract | $8,213.76 | |
Gain on Forward Contract [(276,000 *1.24 - 276,000 *1.21)*.992] | $8,213.76 | ||
Loss on Firm Commitment | $8,213.76 | ||
Firm Commitment | $8,213.76 | ||
Oct. 31 | Forward Contract | $2,826.24 | |
Gain on Forward Contract [(200,000*1.10 – 200,000*1.06) - 5,940.60] | $2,826.24 | ||
Loss on Firm Commitment | $2,826.24 | ||
Firm Commitment | $2,826.24 | ||
Foreign Currency (Euro) | $303,600 | ||
Cash | $292,560 | ||
Forward Contract | $11,040 | ||
Inventory | $303,600 | ||
Foreign Currency (Euro) | $303,600 | ||
Firm Commitment | $11,040 | ||
Adjustment to Net Income | $11,040 |
_____
Part d)
The journal entries are given below:
Date | Account Titles | Debit | Credit |
Sep. 15 | Inventory | $276,000 | |
Accounts Payable (Euro) | $276,000 | ||
Foreign Currency Option (276,000 *0.5) | $13,800 | ||
Cash | $13,800 | ||
Sep. 30 | Foreign Exchange Loss | $13,800 | |
Accounts Payable (Euro) | $13,800 | ||
Foreign Currency Option (276,000 *.85 - 276,000 *.5) | $9,660 | ||
Accumulated Other Comprehensive Income | $9,660 | ||
Accumulated Other Comprehensive Income | $13,800 | ||
Gain on Foreign Currency Option | $13,800 | ||
Option Expense | $2,070 | ||
Accumulated Other Comprehensive Income | $2,070 | ||
Oct. 31 | Foreign Exchange Loss | $13,800 | |
Accounts Payable (Euro) | $13,800 | ||
Foreign Currency Option (276,000 *1.00 – 276,000 *.85) | $4,140 | ||
Accumulated Other Comprehensive Income | $4,140 | ||
Accumulated Other Comprehensive Income | $13,800 | ||
Gain on Foreign Currency Option | $13,800 | ||
Option Expense | $9,660 | ||
Accumulated Other Comprehensive Income | $9,660 | ||
Foreign Currency (Euro) | $303,600 | ||
Cash | $276,000 | ||
Foreign Currency Option | $27,600 | ||
Accounts Payable (Euro) | $303,600 | ||
Foreign Currency (Euro) |
$276,000 |
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