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(b) Prepare a partial statement of financial position at December 31, year 5 which shows accounts receivable and the forward contract. Use a proper three-line
(b) Prepare a partial statement of financial position at December 31, year 5 which shows accounts receivable and the forward contract. Use a proper three-line title for your partial statement.
Manitoba Exporters Inc. (MEI) sells Inuit carvings to countries throughout the world. On December 1, Year 5 , MEI sold 10,000 carvings to a wholesaler in a foreign country at a selling price of 800,000 foreign currency units (FC) when the spot rate was FC1=$0.701. The invoice required the foreign wholesaler to remit by April 1, Year 6. On December 3, Year 5, MEI entered into a forward contract with the Royal Bank to sell FC800,000 at the 120-day forward rate of FC1=$0.741 when the spot rate was still FC1=$0.701. Hedge accounting is not applied. Page 628 The fiscal year-end of MEI is December 31 , and on this date the spot rate was FC1=$0.737 and the forward rate was FC1=$0.752. The payment from the foreign customer was received on April 1, Year 6 , when the spot rate was FC1=$0.802. Required (a) Prepare the journal entries to record (i) the sale and forward contracts on December 1 and 3 , Year 5 , (ii) any adjustments required on December 31 , and (iii) the cash received and settlement of the contracts in Year 6Step by Step Solution
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