Question
Choy Co. purchased rice from China for 150,000 renminbi (r) on Nov. 1, 2015. Payment is due on Jan. 30, 2016. Choy also entered into
Choy Co. purchased rice from China for 150,000 renminbi (r) on Nov. 1, 2015. Payment is due on Jan. 30, 2016. Choy also entered into a 90 day forward contract with an exchange broker to purchase 150,000 renmimbi. The rates were as follows:
Date Spot Rate Forward Rate
Nov. 1, 2015 $0.120 $0.126 – 90 days
Dec. 31, 2015 $0.124 $0.129 – 30 days
Jan. 30, 2016 $0.127
a) Record all journal entries on the transaction, balance sheet and settlement dates. Show computations.
b) What is Choy’s overall gain or loss from these transactions? Show computations.
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Date of transaction Nov 1 2015 Due date of payment Jan 30 2016 forward rate on Nov 1 2015 for 90 days is 1 renminbi 0126 forward rate rate on Dec 31 2...
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Fundamentals of Advanced Accounting
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
5th edition
978-0077924379, 77924371, 978-0078025396, 78025397, 978-0077425654, 77425650, 978-0077667061
