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Refer to P14A-49 above. Assume that Jamie designated the forward

Refer to P14A-49 above. Assume that Jamie designated the forward as a cash flow hedge. Required: Record

Question:

Refer to P14A-49 above. Assume that Jamie designated the forward as a cash flow hedge.

Required:

Record the required journal entries for June 18, June 30, and August 12, using the net method. If no entries are required, state “no entry required” and indicate why.

P14A-49

On June 18, 2021, Jamie Banfied Inc. signed a contract to sell machinery for €100,000 (inventoried cost C$110,000) for delivery on August 12, 2021. Terms of the sale were COD (cash on delivery). Jamie, which has a June 30 year-end, entered into a forward agreement to sell €100,000 on August 12 to mitigate its foreign exchange risk. Jamie designated the forward a fair value hedge. Pertinent exchange rates follow:

Transcribed Image Text:

Date June 18, 2021 June 30, 2021 August 12, 2021 Spot rate C$ per €1 1.300 1.310 1.290 Forward rate for delivery on August 12, 2021, C$ per €1 1.305 1.310 1.290

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For June 18 2021 No entry required The forward contract was entered into on this date b...View the full answer

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Intermediate Accounting Volume 2

ISBN: 9780135220498

4th Edition

Authors: Kin Lo, George Fisher

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Question Posted: Nov 01, 2022 04:18 AM

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