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On October 1 , 2 0 2 4 , Blue Truck Company purchased inventory from a British supplier at a price of 1 0 0
On October Blue Truck Company purchased inventory from a British supplier at a price of British pounds. On October Blue Truck pays $ for a threemonth call option on pounds with a strike price of $ per pound. The option is considered to be a cash flow hedge of a foreign currency transaction. On December the option has a fair value of $ The following spot exchange rates apply:
Date Spot Rate
October $
December $
February $
Prepare the journal entries assuming Blue Truck uses a calendar year end. There should be Date of purchase, Adjust to purchase, Reverse gainloss to OCI, Adjust for change in forward contract, Adjust for spot rate, Reverse to OCI, Adjust forward contract value, Reverse foreign currency, cash in foreign currency
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On October Blue Truck Company SELLS inventory to a British supplier at a price of British pounds. On October Blue Truck pays $ for a threemonth put option on pounds with a strike price of $ per pound. The option is considered to be a FAIR VALUE hedge of a foreign currency transaction. On December the option has a fair value of $ The following spot exchange rates apply:
Date Spot Rate
October $
December $
February $
Prepare the journal entries assuming Blue Truck uses a calendar year end. There should be Date of sale, Adjust to sale, Adjust for change in value of forward contract, Adjust for spot rates, Adjust forward contract value, reverse foreign currency, cash in foreign currency
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