(60 POINTS) PROBLEM I (30 POINTS) On November 1, 2020, Americo, Corporation sold wine on credit to Venezia Company for 650,000 Payment is not due for 120 days Thus, the transaction will be settled on February 28, 2021 On November 1, 2020, Americo, Corporation also entered a 120 day forward contract to sell 650,000 The forward contract is not designated as a hedge The direct exchange rates were as follows REQUIRED Preparetherequiredinformationbelowforboththeoriginal(underlying)transactionandtherelatedforwardcontract INORDERTO GET FULL CREDIT FOR YOUR ANSWERS, PLEASE BE SURE TO CLEARLY SHOW ALL OF YOUR WORK JOURNAL ENTRIES ON NOVEMBER 1, 2020 (TRANSACTION DATE) (4 POINTS) Foreign Currency Transaction YEAR END OF DECEMBER 31, 2020 JOURNAL ENTRIES (6 POINTS) Foreign Currency Transaction FINANCIAL STATEMENT PRESENTATION (10 POINTS) INCOME STATEMENT JOURNAL ENTRIES ON FEBRUARY 28, 2021 (SETTLEMENT DATE) (10 POINTS) Foreign Currency Transaction NAME SPOT FORWARD 11 1 2020 $ 1 06 $ 1 11 (120 days) 12 31 2020 $ 1 13 $ 1 14 (60 days) 2 28 2021 $ 1 07 Forward Contract Forward Contract BALANCE SHEET Forward Contract 1 PROBLEM II (30 POINTS) On November 1, 2020, Americo, Corporation purchased wine on credit from Venezia Company for 650,000 Payment is not due for 120 days Thus, the transaction will be settled on February 28, 2021 On November 1, 2020, Americo, Corporation also entered a 120 day forward contract to purchase 650,000 The forward contract is not designated as a hedge The direct exchange rates were as follows REQUIRED Preparetherequiredinformationbelowforboththeoriginal(underlying)transactionandtherelatedforwardcontract INORDERTO GET FULL CREDIT FOR YOUR ANSWERS, PLEASE BE SURE TO CLEARLY SHOW ALL OF YOUR WORK JOURNAL ENTRIES ON NOVEMBER 1, 2020 (TRANSACTION DATE) (4 POINTS) Foreign Currency Transaction YEAR END OF DECEMBER 31, 2020 JOURNAL ENTRIES (6 POINTS) Foreign Currency Transaction FINANCIAL STATEMENT PRESENTATION (10 POINTS) INCOME STATEMENT JOURNAL ENTRIES ON FEBRUARY 28, 2021 (SETTLEMENT DATE) (10 POINTS) Foreign Currency Transaction SPOT FORWARD 11 1 2020 $ 1 06 $ 1 11 (120 days) 12 31 2020 $ 1 13 $ 1 14 (60 days) 2 28 2021 $ 1 07 Forward Contract Forward Contract BALANCE SHEET Forward Contract

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(60 POINTS) PROBLEM I (30 POINTS) On November 1, 2020, Americo, Corporation sold wine on credit to Venezia Company for 650,000. Payment is not due

(60 POINTS)

PROBLEM I (30 POINTS) On November 1, 2020, Americo, Corporation sold wine on credit to Venezia Company for 650,000. Payment is not due for 120 days. Thus, the transaction will be settled on February 28, 2021. On November 1, 2020, Americo, Corporation also entered a 120-day forward contract to sell 650,000. The forward contract is not designated as a hedge. The direct exchange rates were as follows:

REQUIRED:Preparetherequiredinformationbelowforboththeoriginal(underlying)transactionandtherelatedforwardcontract. INORDERTO GET FULL CREDIT FOR YOUR ANSWERS, PLEASE BE SURE TO CLEARLY SHOW ALL OF YOUR WORK.

JOURNAL ENTRIES ON NOVEMBER 1, 2020 (TRANSACTION DATE): (4 POINTS) Foreign Currency Transaction

YEAR-END OF DECEMBER 31, 2020:

JOURNAL ENTRIES: (6 POINTS) Foreign Currency Transaction

FINANCIAL STATEMENT PRESENTATION (10 POINTS) INCOME STATEMENT

JOURNAL ENTRIES ON FEBRUARY 28, 2021 (SETTLEMENT DATE): (10 POINTS) Foreign Currency Transaction

NAME ____________________________

	SPOT	FORWARD
11/1/2020	$ 1.06	$ 1.11	(120 days)
12/31/2020	$ 1.13	$ 1.14	(60 days)
2/28/2021	$ 1.07

Forward Contract