Alman Company sold pharmaceuticals to a Swedish company for 200.000 kronor (SKr) on April 20 , with

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Alman Company sold pharmaceuticals to a Swedish company for 200.000 kronor (SKr) on April 20 , with settlement to be in 60 days. On the same date, Alman entered into a 60 -day forward contract to sell 200.000 kronor at a forward rate of 1 krona \(=\$ .167\) in order to hedge its exposed foreign currency receivable. The spot rates were:

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a. Record all necessary entries related to the foreign transaction and the forward contract.

b. Compare the effects on net income of Alman's hedging use of the forward exchange contract versus the effects if Alman had not hedged its foreign currency receivable.

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Advanced Financial Accounting

ISBN: 9780072444124

5th Edition

Authors: Richard E. Baker, Valdean C. Lembke, Thomas E. King

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