Question Homeware Ltd is a South African company that orders $40 000 worth of inventory from the United states of America on 1 June 2020. On 1 June 2020, Homeware Ltd enters into a forward exchange contract (FEC) to hedge this transaction. On this date the order was a highly probable forecast transaction. The inventory was loaded Free-on-Board on 20 June 2020 and arrived in South Africa on 27 June 2020. The transaction date was 20 June 2020. Homeware Ltd sold 25% of the inventory on 14 July 2020 and then sold the remaining 75% on 3 November 2020. All sales are cash and homeware Ltd uses a profit mark-up of 25% on the cost. Homeware Ltd settled the creditor on 31 July 2020. Homeware Ltd has a year end of 30 June. The relevant exchange rates were as follows: Spot FEC rate (expiring 31 July 2020) 01-Jun-20 20-Jun-20 27-Jun-20 30-Jun-20 31-Jul-20 $1 = Rand 12.50 11.00 13.50 13.40 13.60 $1 = Rand 12.50 13.50 13.00 13.90 N/A Homeware Ltd treats the hedge of the highly probable forecast transaction as a cashflow hedge and the hedge of a transaction as a fair value hedge. The ultimate asset underlying transaction is non-financial (inventory) which initially requires a basis adjustment to Other Comprehensive Income. No journal narrations are required. You must ignore VAT, tax consequences and the time value of money. You may accept that including retrospective effectiveness, are met throughout time periods above. WHEN ENTERING JOURNAL AMOUNTS Do not use: plus signs; commas; spaces; currency signs or alphabetic characters. Enter the amount the correct Debit or Credit Column WHEN ENTERING THE CORRECT LEDGER DESCRIPTION use list of accounts as provided, you may copy and paste them into your answer. The wording shoud be exactly the same as below. Inventory Foreign Creditor FEC Asset/Liability Cash Flow Hedge Reserve OCI Cash Flow Hedge Reserve PL Forex Gain P/L Forex Loss P/L Bank Fill in the mssing blanks in general journal of Houseware Ltd, each leg of the journal should have the correct ledger description and amount. Indicate clearly whether Profit and Loss (P/L) or Equity (OCI) is affected). 20-Jun-20 Ledger Account Description Dr CR 20-Jun-20DR Inventory CR Purchase of inventory from foreign supplier 20-Jun-201 Ledger Account Description Dr CR 20-Jun-20 Dr FEC Asset/Liability Cr Accounting for FEC Dr Ledger Account Description 20-Jun-20 CR 20-Jun-20DR CR Inventory CHH: Adjustment base cost non financial asset Dr CR 30-Jun-20 Ledger Account Description 30-Jun-20DR CR Foreign Creditor Inventory purchase and recognition of foreign creditor 30-Jun-20 Ledger Account Description Dr CR 30-Jun-20DR FEC Asset/Liability CR Fair value hedge: gain/loss remeasured at year-end 14-Jul-20 Ledger Account Description Dr CR 14-Jul-20DR Bank Sales P/L CR Accounting for sale Dr CR 14-Jul-20 Ledger Account Description 14-Jul-20 DR Cost of sales P/L CR Accounting for cost of sale 31-Jul-20 Ledger Account Description Dr CR 31-Jul-20DR CR Accounting for creditor Foreign Creditor 31-Jul-20 Ledger Account Description Dr CR 31-Jul-20Dr Cr FEC Asset/Liability Accounting for FEC 31-Jul-20 Ledger Account Description Dr CR 31-Jul-20 Dr Foreign Creditor Cr FEC Asset/Liability Cr Settlement Using the same information as provided for the above journal. WHEN ENTERING THE DISCLOSURE AMOUNTS BELOW: Using the same information as provided for the above journal. WHEN ENTERING THE DISCLOSURE AMOUNTS BELOW: Do not use: plus signs; commas; spaces; currency signs or alphabetic characters. No comparrative figures are requred. EXTRACT OF STATEMENT OF FINANCIAL POSITION OF HOMEWARE LTD AS AT 30 JUNE 2020 2020 R ASSETS Current assets Inventory FEC asset/liability Equity and Liability Liabilities Foreign Creditor Equity Cash Flow Hedge Reserve OCI Question Homeware Ltd is a South African company that orders $40 000 worth of inventory from the United states of America on 1 June 2020. On 1 June 2020, Homeware Ltd enters into a forward exchange contract (FEC) to hedge this transaction. On this date the order was a highly probable forecast transaction. The inventory was loaded Free-on-Board on 20 June 2020 and arrived in South Africa on 27 June 2020. The transaction date was 20 June 2020. Homeware Ltd sold 25% of the inventory on 14 July 2020 and then sold the remaining 75% on 3 November 2020. All sales are cash and homeware Ltd uses a profit mark-up of 25% on the cost. Homeware Ltd settled the creditor on 31 July 2020. Homeware Ltd has a year end of 30 June. The relevant exchange rates were as follows: Spot FEC rate (expiring 31 July 2020) 01-Jun-20 20-Jun-20 27-Jun-20 30-Jun-20 31-Jul-20 $1 = Rand 12.50 11.00 13.50 13.40 13.60 $1 = Rand 12.50 13.50 13.00 13.90 N/A Homeware Ltd treats the hedge of the highly probable forecast transaction as a cashflow hedge and the hedge of a transaction as a fair value hedge. The ultimate asset underlying transaction is non-financial (inventory) which initially requires a basis adjustment to Other Comprehensive Income. No journal narrations are required. You must ignore VAT, tax consequences and the time value of money. You may accept that including retrospective effectiveness, are met throughout time periods above. WHEN ENTERING JOURNAL AMOUNTS Do not use: plus signs; commas; spaces; currency signs or alphabetic characters. Enter the amount the correct Debit or Credit Column WHEN ENTERING THE CORRECT LEDGER DESCRIPTION use list of accounts as provided, you may copy and paste them into your answer. The wording shoud be exactly the same as below. Inventory Foreign Creditor FEC Asset/Liability Cash Flow Hedge Reserve OCI Cash Flow Hedge Reserve PL Forex Gain P/L Forex Loss P/L Bank Fill in the mssing blanks in general journal of Houseware Ltd, each leg of the journal should have the correct ledger description and amount. Indicate clearly whether Profit and Loss (P/L) or Equity (OCI) is affected). 20-Jun-20 Ledger Account Description Dr CR 20-Jun-20DR Inventory CR Purchase of inventory from foreign supplier 20-Jun-201 Ledger Account Description Dr CR 20-Jun-20 Dr FEC Asset/Liability Cr Accounting for FEC Dr Ledger Account Description 20-Jun-20 CR 20-Jun-20DR CR Inventory CHH: Adjustment base cost non financial asset Dr CR 30-Jun-20 Ledger Account Description 30-Jun-20DR CR Foreign Creditor Inventory purchase and recognition of foreign creditor 30-Jun-20 Ledger Account Description Dr CR 30-Jun-20DR FEC Asset/Liability CR Fair value hedge: gain/loss remeasured at year-end 14-Jul-20 Ledger Account Description Dr CR 14-Jul-20DR Bank Sales P/L CR Accounting for sale Dr CR 14-Jul-20 Ledger Account Description 14-Jul-20 DR Cost of sales P/L CR Accounting for cost of sale 31-Jul-20 Ledger Account Description Dr CR 31-Jul-20DR CR Accounting for creditor Foreign Creditor 31-Jul-20 Ledger Account Description Dr CR 31-Jul-20Dr Cr FEC Asset/Liability Accounting for FEC 31-Jul-20 Ledger Account Description Dr CR 31-Jul-20 Dr Foreign Creditor Cr FEC Asset/Liability Cr Settlement Using the same information as provided for the above journal. WHEN ENTERING THE DISCLOSURE AMOUNTS BELOW: Using the same information as provided for the above journal. WHEN ENTERING THE DISCLOSURE AMOUNTS BELOW: Do not use: plus signs; commas; spaces; currency signs or alphabetic characters. No comparrative figures are requred. EXTRACT OF STATEMENT OF FINANCIAL POSITION OF HOMEWARE LTD AS AT 30 JUNE 2020 2020 R ASSETS Current assets Inventory FEC asset/liability Equity and Liability Liabilities Foreign Creditor Equity Cash Flow Hedge Reserve OCI