Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Problem IV: On 11/1/2020, Kent Company forecasted the sale of inventory to a foreign customer for 500,000 FCU. It was estimated that the inventory
Problem IV: On 11/1/2020, Kent Company forecasted the sale of inventory to a foreign customer for 500,000 FCU. It was estimated that the inventory would be delivered and paid on 3/20/2021. Also, on 11/1/2020, the company purchased a put option to sell 500,000 FCU at a strike price of $0.73 expiring end of 2021. An option premium of $9,000 was paid. 1-Nov 31-Dec 20-Mar Spot Rates 0.72 0.77 0.71 FV of Option 9,000 7,500 Instructions: Prepare the journal entries required on the dates listed: 1. Assuming that on 3/20/2021 the option was exercised, and the inventory delivered and paid. 2. Assuming that the spot rate on 3/20/2021 is $0.76?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started