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Problem 10-7 LO1, 2,4 Hamilton Importing Corp. (HIC) imports goods from countries around the world for sale in Canada. On December 1, Year 3, HIC
Problem 10-7 LO1, 2,4 Hamilton Importing Corp. (HIC) imports goods from countries around the world for sale in Canada. On December 1, Year 3, HIC purchased 11,300 watches from a foreign wholesaler for DM613,000 when the spot rate was DMI = $0.754. The invoice called for payment to be made on April 1, Year 4. On December 3, Year 3, HIC entered into a forward contract with the Royal Bank at the 120-day forward rate of DMI = $0.794. Hedge accounting is not applied. The fiscal year-end of HIC is December 31. On this date, the spot rate was DMI = $0.770 and the 90-day for- ward rate was DMI = $0.799. The payment to the foreign supplier was made on April 1. Year 4. when the spot rate was DMI = $0.816. Required (a) Prepare the journal entries required in Year 3 and Year 4, assuming that hedge accounting is not applied. (b) Prepare a partial statement of financial position as at December 31, Year 3, which shows accounts payable and the forward contract. Problem 10 - 7 Fill in the accounts and the amounts ($) for the following journal entries a) Hedge accounting is not applied. Dec. 1, Year 3 entry Dec. 3, Year 3 - Memorandum (know what is included) Dec. 31, Year 3 entries Dec. 31 Dec. 31 April 1, Year 4 entries Apr. 1 Apr. 1 Apr. 1 Apr. 1 b) Balance Sheet, December 31, Year 3 Only fill in the appliable lines - account name and balance Assets Liabilities
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