- On June 1, 2017, XYZ Company in U.S sold inventory to Nature Inc. in UK for 60,000 pounds when the spot rate was 1.30 dollars. The invoice was paid by Nature on February 3, 2018, when the spot rate was 1.40 dollars. On December 2017 the spot rate was 1.50 dollars. (8 marks)
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- On June 1, 2017, XYZ Company in U.S sold inventory to Nature Inc. in UK...
Denominated sales transaction entries A U.S. company Abe Inc. sold its inventory to Poul SA for $20,000, and to Brit Ltd. for 20,000 euros on December 10, 2013 when the spot rate for euros is $0.723. Abe closed its books on December 31, 2014, when the spot rate for euro is $0.718, and collected the amount from the sale on January 10, 2014, when the spot rate for euro is $0.730. REQUIRED: Prepare all necessary journal entries to account for...
On June 1, 2017, ABC INC approached XYZ Inc about buying a parcel of undeveloped land. XYZ Inc was asking $240,000 for the land and ABC INC saw that there was some flexibility in the asking price. ABC INC did not have enough money to make a cash offer to XYZ Inc and proposed to give, in return for the land, a $300,000, five-year promissory note that bears interest at the rate of 4%. The interest is to be paid...
5. On December 1, 2018, Keenan Company, a U.S. firm, sold merchandise to Velez Company of Canada for 150,000 Canadian dollars (CAD). Collection of the receivable is due on February 1, 2019. Keenan purchased a foreign currency put option with a strike price of $.97 (U.S.) on December 1, 2018. This foreign currency option is designated as a cash flow hedge. Relevant exchange rates follow: Date Spot Rate Option Premium December 1, 2018 $ 0.97 $ 0.05 December 31, 2018...
On November 1, 2017, Bernard Company (a U.S.-based company) sold merchandise to a foreign customer for 270,000 FCUs with payment to be received on April 30, 2018. At the date of sale, Bernard entered into a six-month forward contract to sell 270,000 FCUs. The company properly designates the forward contract as a cash flow hedge of a foreign currency receivable. The following exchange rates apply: Date November 1, 2017 December 31, 2017 April 30, 2018 Spot Rate $ 0.38 0.36...
On November 1, 2017, Bernard Company (a U.S.-based company) sold merchandise to a foreign customer for 190,000 FCUs with payment to be received on April 30, 2018. At the date of sale, Bernard entered into a six-month forward contract to sell 190,000 FCUs. The company properly designates the forward contract as a cash flow hedge of a foreign currency receivable. The following exchange rates apply: Date Spot Rate Forward Rate (to April 30, 2018) November 1, 2017 $ 0.30 $...
Problem 4. On November 1, 2017, US Frigatebird Company sold an airplane worth S1 million Australian dollars to Australian company Heron Inc., to be paid on February 1, 2018 in Sydney. In order to hedge foreign exchange, Frigatebird entered into a 90 day forward contract on the same day for the amount of the sale at .73 US per Australian dollar. The relevant exchange rates are of US dollars per Australian dollar: Forward Rate Date Spot Rate (Delivery on 2/1/2018)...
On December 15, 2017, Lisbeth Inc. (a U.S. company purchases merchandise inventory from a foreign supplier for 50,000 schillings. Lisbeth agrees to pay in 45 days after it sells the merchandise. Lisbeth makes sales rather quickly and pays the entire obligation on January 25, 2018. Currency exchange rates for 1 schilling are as follows: 0.30 December 15, 2017 December 31, 2017 917 January 25, 2018 January 31, 2018 Prepare all journal entries for Lisbeth Company in connection with this purchase...
Paragraph Parti XYZ company manufactures custom made bed and its year end is 30 June. The company purchases its raw materials from a wide range of suppliers. Below is a description of XYZ's purchasing system When production supervisors require raw materials, they complete a requisition form and this is submitted to the purchase ordering department. Requisition forms do not require authorisation and no reference is made to the current inventory levels of the materials being requested. Staff in the purchase...
On June 3, 2017, Hunt Company sold to Ann Mount merchandise having a sales price of $8,000 (cost $6,000) with terms of n/60, f.o.b. shipping point. Hunt estimates that merchandise with a sales value of $800 will be returned. An invoice totaling $120 was received by Mount on June 8 from Olympic Transport Service for the freight cost. Upon receipt of the goods, on June 8, Mount returned to Hunt $300 of merchandise containing flaws. Hunt estimates the returned items...
Malibu, Inc., is a U.S. company that export goods to British. It plans to use put options to hedge receivables of 100,000 pounds in 90 days. Three put options are available that have an expiration date 90 days from now. Fill in the number of dollars needed to receive for the receivables (including the option premium paid) for each option available under each possible scenari Option A Option B Option C Scenario Spot rate of Probability Exercise price- $1.63 Exercise...