Most of the written answers are correct.
Hamilton Importing Corp. (HIC) imports goods from countries around the world for sale in CanadaOn December 1, Year 3. HIC purchased 11,300 watches from a foreign wholesaler for DM613,000 when the spot rate was DM - $0754 The invoice called for payment to be made on April 1. Year 4. On December 3, Year 3. HIC entered into a forward contract with the Royal Bank at the 120-day forward rate of DM1 = $0.794. Hedge accounting is not applied The fiscal year-end of HIC is December 31. On this date, the spot rate was DM1 - $0.770 and the 90-day forward rate was DM1 - $0.799. The payment to the foreign supplier was made on April 1 Year 4, when the spot rate was DM1 = $0.816. (c) Prepare one journal entry to summarize the combined effect of all entries in part (a). (In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank.be certain to enter "0" wherever required.) Summary Journal entry General Journal Debit Credit Inventory 462202 Exchange loss Cash Record the summary of purchase of Inventory and forward contract. V (d) Prepare the journal entries required in Year 3 and Year 4, assuming that the forward contract is designated as a fair value hedge and is segregated between the spot element and forward element (In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank - be certain to enter "0" wherever required.) Credit Date December 1, Year 3 Debit 462202 462202 General Journal Inventory Accounts payable Record the purchase of inventory. Accounts receivable Accounts payable Record the forward contract. V 486722 December 3, Year 3 486722 v 9808 December 31, Year 3 Exchange loss Accounts payable Revalue accounts payable at fair value. 9808 V 10421 Forward contract OCI - exchange loss Exchange gain Revalue forward contract at fair value. No journal entry required No journal entry require Record amortization loss from premium on forward contract over 4 months. April 1. Year 4 28198 Exchange loss Accounts payable Revalue accounts payable at fair value. 28198 10421 V Forward contract OCI - exchange loss Exchange gain Revalue forward contract at fair value. No journal entry required No journal entry require Record amortization loss from premium on forward contract over 4 months. 500208 Cash (DM) Forward contract Cash 13486 486722 28198 April 1, Year 4 28198 Exchange loss Accounts payable Revalue accounts payable at fair value. 10421 Forward contract OCI-exchange loss Exchange gain Revalue forward contract at fair value. No journal entry required No journal entry require Record amortization loss from premium on forward contract over 4 months. 500208 Cash (DM) Forward contract Cash Record the receipt of cash fron bank. 13486 486722 V 500208 Accounts payable Cash (DM) Record the cash paid for purchase of inventory. 500208 (e) Prepare one journal entry to summarize the combined effect of all entries in part (d). (In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank - be certain to enter "O" wherever required.) Summary Journal entry General Journal Debit Credit (Click to seled) (Click to select) (Click to select) Record the summary of purchase of inventory and forward contract. Hamilton Importing Corp. (HIC) imports goods from countries around the world for sale in CanadaOn December 1, Year 3. HIC purchased 11,300 watches from a foreign wholesaler for DM613,000 when the spot rate was DM - $0754 The invoice called for payment to be made on April 1. Year 4. On December 3, Year 3. HIC entered into a forward contract with the Royal Bank at the 120-day forward rate of DM1 = $0.794. Hedge accounting is not applied The fiscal year-end of HIC is December 31. On this date, the spot rate was DM1 - $0.770 and the 90-day forward rate was DM1 - $0.799. The payment to the foreign supplier was made on April 1 Year 4, when the spot rate was DM1 = $0.816. (c) Prepare one journal entry to summarize the combined effect of all entries in part (a). (In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank.be certain to enter "0" wherever required.) Summary Journal entry General Journal Debit Credit Inventory 462202 Exchange loss Cash Record the summary of purchase of Inventory and forward contract. V (d) Prepare the journal entries required in Year 3 and Year 4, assuming that the forward contract is designated as a fair value hedge and is segregated between the spot element and forward element (In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank - be certain to enter "0" wherever required.) Credit Date December 1, Year 3 Debit 462202 462202 General Journal Inventory Accounts payable Record the purchase of inventory. Accounts receivable Accounts payable Record the forward contract. V 486722 December 3, Year 3 486722 v 9808 December 31, Year 3 Exchange loss Accounts payable Revalue accounts payable at fair value. 9808 V 10421 Forward contract OCI - exchange loss Exchange gain Revalue forward contract at fair value. No journal entry required No journal entry require Record amortization loss from premium on forward contract over 4 months. April 1. Year 4 28198 Exchange loss Accounts payable Revalue accounts payable at fair value. 28198 10421 V Forward contract OCI - exchange loss Exchange gain Revalue forward contract at fair value. No journal entry required No journal entry require Record amortization loss from premium on forward contract over 4 months. 500208 Cash (DM) Forward contract Cash 13486 486722 28198 April 1, Year 4 28198 Exchange loss Accounts payable Revalue accounts payable at fair value. 10421 Forward contract OCI-exchange loss Exchange gain Revalue forward contract at fair value. No journal entry required No journal entry require Record amortization loss from premium on forward contract over 4 months. 500208 Cash (DM) Forward contract Cash Record the receipt of cash fron bank. 13486 486722 V 500208 Accounts payable Cash (DM) Record the cash paid for purchase of inventory. 500208 (e) Prepare one journal entry to summarize the combined effect of all entries in part (d). (In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank - be certain to enter "O" wherever required.) Summary Journal entry General Journal Debit Credit (Click to seled) (Click to select) (Click to select) Record the summary of purchase of inventory and forward contract
