Question
Need assistance as soon as possible please 1) Provide the journal entries at 30 April 2017, 30 June 2017 and 31 July 2017 to record
Need assistance as soon as possible please
1) Provide the journal entries at 30 April 2017, 30 June 2017 and 31 July 2017 to record this transaction (give narrations on journal entries)
Graxar Ltd (Australian company) sells a machine to an American company for US$ 100 000 on 30 April 2017 and will be paid 3 months later on 31 July 2017. The cost of the machine was AUD 30 000. To hedge the foreign exchange risk Graxar Ltd enters a forward exchange contract on 30 April 2017 to lock in the price it will receive to sell US$ 100 000 on 31 July 2017. Graxar Ltd has a 30 June year end.
The spot exchange rate at 30 April 2017 was 1.2 AUD per 1 US$, while at 30 June 2017 it was 1.3 AUD per 1 US$ and 31 July 2017 1.4 AUD per 1 US$.
The forward contract rate on 30 April 2017 to sell American dollars in 3 months time was 1.25 AUD per 1 US$, while the comparative market forward rate at 30 June 2017 was 1.1 AUD per 1 US$ and at 31 July 1.4 AUD per 1 US$
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