question no 1
Hamilton Importing Corp. (HIC) imports goods from countries around the world for sale in Canada. On December 1, Year 3, HIC purchased 11,600 watches from a foreign wholesaler for DM616,000 when the spot rate was DM1 = $0.757. 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 DM1 = $0.797. Hedge accounting is not applied. The fiscal year-end of HIC is December 31. On this date, the spot rate was DM1 = $0.773 and the 90-day forward rate was DM1 = $0.802. The payment to the foreign supplier was made on April 1, Year 4, when the spot rate was DM1 = $0.818. Required: (a) Prepare the journal entries required in Year 3 and Year 4, assuming that hedge accounting is not applied. (In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank - be certain to enter "0" wherever required.)Date General Journal Debit Credit December 1, Year 3 Inventory 466312 Accounts payable 466312 Record the purchase of inventory. December 3, Year 3 No journal entry required v O No journal entry require v 0 Record the forward contract. December 31, Year 3 Exchange loss 9856 Accounts payable 9856 Revalue accounts payable at fair value. No journal entry required v 0 No journal entry require v 0 Revalue forward contract at fair value. April 1, Year 4 Exchange loss Accounts payable Revalue accounts payable at fair value. No journal entry required v I Nn inural entry require vRevalue forward contract at fair value. April 1, Year 4 Exchange loss Accounts payable Revalue accounts payable at fair value. No journal entry required v No journal entry require v Revalue forward contract at fair value. Exchange gains and loss( v Forward contract Cash Record the receipt of cash from bank. Accounts payable Cash (DM) Record the cash paid for purchase of inventory.(b) Prepare a partial statement of financial position as at December 31, Year 3, which shows accounts payable and the forward contract. (Omit $ sign in your response.) Hamilton Importing Corp. Partial Statement of Financial Position at December 31, Year 3 Assets (Click to select) Liabilities (Click to select) (c) Prepare one journal entry to summarize the combined effect of all entries in part (a). (In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank - be certain to enter "(" wherever required.) General Journal Debit Credit Summary journal entry (Click to select) (Click to select) (Click to select) Record the summary of purchase of inventory and forward contract.(d) Prepare the journal entries required in Year 3 and Year 4, assuming that the forward contract is designated as a fair value hedge and is segregated between the spot element and forward element. (In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank - be certain to enter "0" wherever required.) Date General Journal Debit Credit December 1, Year 3 (Click to select) (Click to select) Record the purchase of inventory. December 3, Year 3 (Click to select) (Click to select) Record the forward contract. December 31, Year 3 (Click to select) (Click to select) Revalue accounts payable at fair value. (Click to select) (Click to select) (Click to select) Revalue forward contract at fair value. (Click to select) (Click to select) Record amortization loss from premium on forward contractApril 1, Year 4 (Click to select) (Click to select) Revalue accounts payable at fair value. Click to select) (Click to select) (Click to select) Revalue forward contract at fair value. (Click to select) (Click to select) Record amortization loss from premium on forward contract over 4 months. (Click to select) (Click to select) (Click to select) Record the receipt of cash from bank. (Click to select) (Click to select) Record the cash paid for purchase of inventory.Record the cash paid for purchase of Inventory e) Prepare one journal entry to summarize the combined effect of all entries in part (d). (In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank - be certain to enter "(" wherever required.) General Journal Debit Credit Summary journal entry Click to select) (Click to select) (Click to select) Record the summary of purchase of inventory and forward contract
