Question
On October 1 st .2019, the X Company of London, Ontario, Canada, received a purchase order to sell inventory at a sales price of US$80,000
On October 1st.2019, the X Company of London, Ontario, Canada, received a purchase order to sell inventory at a sales price of US$80,000 to Y Limited of New York, USA.The goods were delivered on November 15th.2019, with payment due on January 29th.2020.Both companies have December 31st. year ends.Exchange rates were as follows:-
Spot rate...........................Forward rate
October 1st.2019......................................................US$1 = C$ 1.08.................US$1 = C$1.130
November 15th..2019..............................................US$1 = C$ 1.09.................US$1 = C$1.124
December 31st..2019..............................................US$1 = C$ 1.10 .................US$1 = C$1.130
January 29th..2020..................................................US$1 = C$ 1.12
Required:-
Assume that X entered into a forward contract as a fair value hedge of its accounts receivable balance on November 15th. 2019, do all journal entries required for 2019 and January 29th.2020.
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