Hull Manufacturing Corp. (HMQ), a Canadian company, manufactures Instruments used to measure the moisture content of barley and wheat. The company sells primarily to the domestic market, but in Year 3. It developed a small market in Argentina. In Year 4, HMC began purchasing semi-finished components from a supplier in Romania. The management of HMC is concerned about the possible adverse effects of foreign exchange fluctuations. To deal with this matter, all of HMC's foreign-currency-denominated receivables and payables are hedged with contracts with the company's bank. The year-end of HMC is December 31. IS The following transactions occurred late In Year 4: On October 15. Year 4. HMC purchased components from its Romanlan supplier for 811.000 Romanian leus (RL). On the same day. HMC entered into a forward contract for RON811.000 at the 60-day forward rate of RON1 = $0.419. The Romanlan supplier was paid in full on December 15, Year 4. On December 1, Year 4, HMC made a shipment to a customer in Argentina. The selling price was 2.511,000 Argentinean pesos (ARS). with payment to be received on January 31, Year 5. HMC Immediately entered into a forward contract for ARS2,511,000 at the two-month forward rate of ARS1 = $0.237. During this period, the exchange rates were as follows: Forward Rates October 15, Year 4 December 1, Year 4 December 15, Year 4 December 31, Year 4 Spot Rates RON1 = $8.406 ARSI = 8.260 RON1 = $0.398 ARS1 = $0.244 ARS1 = $.233 Hedge accounting is not adopted. Required: (a) Prepare the Year 4 journal entries to record the transactions described above and any year-end adjusting entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Required: (a) Prepare the Year 4 journal entries to record the transactions described above and any year-end adjusting entries. (If no entry Is required for a transaction/event, select "No journal entry required" In the first account field.) View transaction list Record the purchase of inventory. 9 10 > Record the forward contract entered for Romanian leus Record the forward contract entered for Argentinean pesos Credit Record the forward contact. Revalue accounts payable at fair value. Revalue forward contract at fair value. 7 Record the receipt from bank. Note: = journal entry has been entered Record entry Clear entry View general journal Record the payment to accounts payable. 9 Revalue accounts receivable at fair value. 10 Revalue forward contract at fair value. (b) Prepare the December 31, Year 4. balance sheet presentation of the receivable from the Argentinean customer, and the accounts associated with the forward contract. (Omit $ sign In your response.) Hull Manufacturing Corp. Balance Sheet as at December 31, Year 4 Assets Account receivable Forward contract $ $
