Question
On March 1, QRS, a U.S. Company, sold inventory to a German supplier for 100,000 euros to be paid on May 31. Assume the following
On March 1, QRS, a U.S. Company, sold inventory to a German supplier for 100,000 euros to be paid on May 31. Assume the following exchange rates:
$1.2979, March 1 spot rate
$1.3158, forward rate quoted on March 1 for delivery on May 31
$1.2987, spot rate on March 31
$1.3123, forward rate quoted on March 31 for delivery on May 31
$1.3156, spot rate on May 31
a. Assuming that the books are closed at the end of the quarter, what should be the journal entries for the importer on March 1, March 31, and May 31?
b. Assuming that a forward contract is entered into and that the discount factor is .9803 for 2 months, what would be the journal entries on March 1, March 31, and May 31? Assume that the company designates this as a fair value hedge.
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Advanced Accounting
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
10th edition
0-07-794127-6, 978-0-07-79412, 978-0077431808
