Question
ABC Co. expects the value of Euro to decrease in the next 30-days. Accordingly, on Dec. 15, 20x1, ABC Co. enters into a 30-day forward
ABC Co. expects the value of Euro to decrease in the next 30-days. Accordingly, on Dec. 15, 20x1, ABC Co. enters into a 30-day forward contract to sell 100,000 euros at the forward rate of P50.00. On December 31, 20x1, the forward rate was P51.00 and by Janaury 15, 20x2, the spot rate moved to P47.00
Provide the journal entries under each of the following scenarios:
- The contract is settled by the actual sale of foreign currency; and
- The contract is settled through net cash payment.
Please provide full solution and explanatiom thank you
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Corporate Financial Accounting
Authors: Carl S Warren, Jeff Jones
16th Edition
0357510380, 978-0357510384
