Question
Hello! Please help me with the journal entries. I really need help. My attempts are bold and italicized. Thank you! 1. Foreign Exchange Entries Hedge
Hello! Please help me with the journal entries. I really need help. My attempts are bold and italicized. Thank you!
1. Foreign Exchange Entries Hedge
Carter, a US-based company, sold goods to a customer in Thailand for 3,000,000 Thailand baht on December 1, 2020. On that date, Carter entered into a forward contract with a foreign currency dealer. On February 1, 2021, Carter sold the 3,000,000 baht to the foreign currency dealer after receiving it from the Thailand customer. The rates for Thailand baht were:
Spot Forward
December 1, 2020 $.0634 $.0622
December 31, 2020 $.0620 $.0608
February 1, 2021 $.0644 -
- Prepare the journal entries on December 1, 2020 to record
- The sale of goods to the Thailand customer.
December 1, 2020: Transaction Date
A/R 190,200
Sales or (Revenue) 190,200 (3,000,000 X .0634)
- The agreement to enter into the forward contract.
December 1, 2020: Transaction Date
Foreign Currency Loss 3,600
A/R 3,600 (3,000,000 X .0622)-190,200
- Prepare the journal entries on December 31, 2020 to record
- Any foreign exchange gain or loss from the sale of goods to the customer.
- Any gain or loss from the forward contract.
- Prepare the journal entries on February 1, 2021 to record
- Any foreign exchange gain or loss from the sale of goods to the customer.
- Any gain or loss from the forward contract.
- The receipt of the 3,000,000 baht from the customer.
The payment of the baht to the exchange dealer and the receipt of cash from the dealer.
Thank you!
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started