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Questions 2 1 - 2 7 use the same facts, listed below and repeated for each question: On Nov. 1 , 2 0 x 1
Questions use the same facts, listed below and repeated for each question:
On Nov. x TasteeFood Co a US company, purchased and received tons of assorted dried peppers from Ola Co which is
Iocated in Mexico. The peppers cost a total of million pesos but TasteeFood does not plan to pay the related payable until Feb.
TasteeFood is concerned that pesos may increase in value so decided on Nov. x to hedge using a forward contract, with a
forward price of $ peso. Some rates are:
Q: Make any journal entries needed on xa reporting date for anything related to the purchase and forward. Use that
entry or entries to answer this question: What is the total effect of any entries needed on Dec x on Net Income?
A $ decrease
$ increase
$ decrease
$ increase
None of the above
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