Journal entry worksheet:

(A) 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.)

1. Record purchase of wine from french supplier 9/15

2. Record the entry for changes in the exchange rate 9/30

3. Record the entry for changes in the exchange rate 10/31

4. Record purchase of foreign currency 10/31

5. Record payment made to french supplier 10/31

(B) 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.)

1. Record purchase of wine from french supplier. 9/15

2. Record entry for the forward contract entered into. 9/15

3. Record the entry for changes in the exchange rate. 9/30

4. Record gain or loss on forward contract. 9/30

5. Record the entry for changes in the exchange rate. 10/31

6. Record gain or loss on forward contract. 10/31

7. Record purchase of foreign currency. 10/31

8. Record payment made to french supplier. 10/31

(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 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.)

1. Record entry placed for purchase of wine. 9/15

2. Record entry for the forward contract entered into. 9/15

3. Record gain or loss on forward contract. 9/30

4. Record gain or loss on firm commitment. 9/30

5. Record gain or loss on forward contract. 10/31

6. Record gain or loss on firm commitment. 10/31

7. Record settlement of forward contract. 10/31

8. Record the receipt of goods and payment made. 10/31

9. Record entry to close the firm commitment. 10/31

(D) The wine arrived on September 15, and the company made payment on October 31. On September 15, Vino Veritas purchased a 45-day call option for 200,000 euros. It properly designated the option as a cash flow hedge of a foreign currency payable. Prepare journal entries to account for the import purchase and foreign currency option. (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.)

1. Record purchase of wine from french supplier. 9/15

2. Record purchase of foreign currency option as an asset. 9/15

3. Record the entry for changes in the exchange rate. 9/30

4. Record entry to adjust the fair value of the option. 9/30

5. Record the gain or loss on the option. 9/30

6. Record option expense. 9/30

7. Record the entry for changes in the exchange rate. 10/31

8. Record entry to adjust the fair value of the option. 10/31

9. Record the gain or loss on the option. 10/31

10. Record option expense. 10/31

11. Record settlement of forward contract. 10/31

12. Record payment made to foreign supplier. 10/31

(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 200,000 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 spot rate. Prepare journal entries to account for the foreign currency option, 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 the nearest dollar amount.)

1. Record purchase of foreign currency option as an asset. 9/15

2. Record gain or loss on foreign currency option. 9/30

3. Record gain or loss on firm commitment. 9/30

4. Record gain or loss on foreign currency option. 10/31

5. Record gain or loss on firm commitment. 10/31

6. Record settlement of forward contract. 10/31

7. Record the receipt of goods and payment made. 10/31

8. Record entry to close the firm commitment. 10/31

Vino Veritas Company, a U.S.-based importer of wines and spirits, placed an order with a French supplier for 1,500 cases of wine at a price of 260 euros per case. The total purchase price is 390,000 euros. Relevant exchange rates for the euro are as follows: Forward Rate to October 31 $1.36 1.39 1.40 Call Option Premium for October 31 (strike price $1.30) 0.030 0.065 0.100 Spot Rate Date September 15 September 30 October 31 $ 1.30 1.35 1.40 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 390,000 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 390,000 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- day call option for 390,000 euros. It properly designated the option as a cash flow hedge of a foreign currency payable. Prepare 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 390,000 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 spot rate. Prepare journal entries to account for the foreign currency option, firm commitment, and import purchase Vino Veritas Company, a U.S.-based importer of wines and spirits, placed an order with a French supplier for 1,500 cases of wine at a price of 260 euros per case. The total purchase price is 390,000 euros. Relevant exchange rates for the euro are as follows: Forward Rate to October 31 $1.36 1.39 1.40 Call Option Premium for October 31 (strike price $1.30) 0.030 0.065 0.100 Spot Rate Date September 15 September 30 October 31 $ 1.30 1.35 1.40 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 390,000 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 390,000 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- day call option for 390,000 euros. It properly designated the option as a cash flow hedge of a foreign currency payable. Prepare 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 390,000 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 spot rate. Prepare journal entries to account for the foreign currency option, firm commitment, and import purchase