Question
On June 1 Hame Co. purchased inventory from a foreign supplier at a price of 15,000 FCU (FCU is foreign currency units) Hame Co. will
On June 1 Hame Co. purchased inventory from a foreign supplier at a price of 15,000 FCU (FCU is foreign currency units)
Hame Co. will make payment in three months on September 1
On June 1 Hame Co entered into a forward contract maturing on September 1 as a fair value hedge of its FCU liability.
Hame Co. closes its books to prepare interim financial statements on June 30 of each year.
Prepare all journal entries, including adjusting entries, to record the transaction and the forward contract.
Date Spot rate Forward rate*
June 1 $0.40 $0.45
June 30 $0.43 $0.44
Sept. 1 $0.46
*Forward rate is for a contract written on June 1 to mature on September 1.
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Options Futures And Other Derivatives
Authors: John C. Hull
11th Edition
013693997X, 9780136939979
