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On October 1st 2020, American Company purchased a 1,000,000 Yen CD when the Yen was worth 2 cents The 3 year 12% CD pays interest
| On October 1st 2020, American Company purchased a 1,000,000 Yen CD when the Yen was worth 2 cents |
| The 3 year 12% CD pays interest on April 1st and October 1st each year. |
| Other information: | |
| December 31, 2020 Yen is worth 3 cents | |
| April 1st 2021 Yen is worth 2.5 cents | |
| October 1st 2021 Yen is worth 2 cents | |
| December 31, 2021 Yen is worth 3.5 cents | |
| April 1st 2022 Yen is worth 4 cents | |
| October 1st 2022 Yen is worth 3.5 cents | |
| December 31st Yen is worth 3 cents | |
| April 1st 2023 Yen is worth 2 cents | |
| October 1st 2023 Yen is worth 1.5 cents.
| |
| REQUIRED: | Make all the journal entries American Company makes with respect to its CD including the purchase and redemption of the CD. |
| Hint; don't forget adjusting entries needed on December 31st. |
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Fundamentals of Corporate Finance
Authors: Berk, DeMarzo, Harford
2nd edition
132148234, 978-0132148238
