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Vino Veritas Company, a U.S.-based importer of wines and spirits, placed an order with a French supplier for 1,800 cases of wine at a price of 290 euros per case. The total purchase price is 522,000 euros. Relevant exchange rates for the euro are as follows Forward Rate to October 31 Call Option Premium for October 31 (strike price $1.45) Spot Rate Date September 15 September 30 October 31 $ 1.45 $ 1.51 $0.045 1.50 1.55 1.54 1.55 0.080 0.100 Vino Veritas Company has an incremental borrowing rate of 12 percent (1 percent per month) and closes the books and prepares financial statements at September 30 a. Assume that the wine arrived on September 15, and the company made payment on October 31. There was no attempt to hedge b. Assume that the wine arrived on September 15, and the company made payment on October 31. On September 15, Vino Veritas the exposure to foreign exchange risk. Prepare journal entries to account for this import purchase entered into a 45-day forward contract to purchase 522,000 euros. It properly designated the forward contract as a fair value hedge of a foreign currency payable. Prepare journal entries to account for the import purchase and foreign currency forward contract c. Vino Veritas ordered the wine on September 15. The wine arrived and the company paid for it on October 31. On September 15 Vino Veritas entered into a 45-day forward contract to purchase 522,000 euros. The company properly designated the forward contract as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the forward rate. Prepare journal entries to account for the foreign currency forward contract, firm commitment, and import purchase d. The wine arrived on September 15, and the company made payment on October 31. On September 15, Vino Veritas purchased a 45- .Vino Ventas ordered the wine on September ..The nearrivedand the compan pad forton ctober 31 Se tember 5 Vino Veritas entered into a 45-day forward contract to purchase 522,000 euros. The company properly designated the forwarc contract as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by refe to changes in the forward rate. Prepare journal entries to account for the foreign currency forward contract, firm commitment, a import purchase d. The wine arrived on September 15, and the company made payment on October 31. On September 15, Vino Veritas purchased day call option for 522,000 euros. It properly designated the option as a cash flow hedge of a foreign currency payable. Prepar journal entries to account for the import purchase and foreign currency option e. The company ordered the wine on September 15. It arrived on October 31, and the company made payment on that date. On September 15, Vino Veritas purchased a 45-day call option for 522,000 euros. It properly designated the option as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the rate. Prepare journal entries to account for the foreign currency option, firm commitment, and import purchase Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D RequiredE Assume that the wine arrived on September 15, and the company made payment on October 31. There was no attempt to hedge the exposure to foreign exchange risk. Prepare journal entries to account for this import purchase. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Required A Required BRequired C Required D Required E Assume that the wine arrived on September 15, and the company made payment on October 31. On September 15, Vino Veritas entered into a 45-day forward contract to purchase 200,000 euros. It properly designated the forward contract as a fair value hedge of a foreign currency payable. Prepare journal entries to account for the import purchase and foreign currency forward contract. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your present value interest factor to four decimal places. Round your answers to 2 decimal places.) Show lessA View transaction list Journal entry worksheet Record purchase of wine from french supplier. Complete this question by entering your answers in the tabs below Required A Required B Required Required D Required E Vino Veritas ordered the wine on September 15. The wine arrived and the company paid for it on October 31. On September 15, Vino Veritas entered into a 45-day forward contract to purchase 200,000 euros. The company properly designated the forward contract as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the forward rate. Prepare journal entries to account for the foreign currency forward contract, firm commitment, and import purchase. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your present value interest factor to four decimal places. Round your answers to 2 decimal places.) Show lessA View transaction list Journal entry worksheet Record entry placed for purchase of wine
