Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please help with journal entry and net benefit On October 1, 2020, Mertag Company (a U.S.-based company) receives an order from a customer in Poland

please help with journal entry and net benefit

image text in transcribed

image text in transcribed

On October 1, 2020, Mertag Company (a U.S.-based company) receives an order from a customer in Poland to deliver goods on January 31, 2021, for a price of 1,000,000 Polish zlotys (PLN). Mertag enters into a forward contract on October 1,2020 , to sell PLN 1,000,000 in four months (on January 31, 2021). U.S. dollar-Polish zloty exchange rates are as follows: Mertag designates the forward contract as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the forward rate, and, therefore, forward points are included in assessing hedge effectiveness. Mertag must close its books and prepare financial statements on December 31 . Discounting to present value can be ignored. a. Prepare journal entries for the foreign currency forward contract, foreign currency firm commitment, and export sale. b. Determine the net benefit, if any, realized by Mertag from entering into the forward contract. Complete this question by entering your answers in the tabs below. Prepare journal entries for the foreign currency forward contract, foreign currency firm commitment, and export sale. (Do not round Prepare journal entries for the foreign currency forward contract, foreign currency firm commitment, and export sale. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Journal entry worksheet

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditor Going Concern Reporting A Review Of Global Research And Future Research Opportunities

Authors: Marshall A. Geiger, Anna Gold, Philip Wallage

1st Edition

0367649489, 978-0367649487

More Books

Students also viewed these Accounting questions