On November 1, 2017, Bernard Company (a U.S.-based company) sold merchandise to a foreign customer...
90.2K
Verified Solution
Link Copied!
Question
Accounting
On November 1, 2017, Bernard Company (a U.S.-based company) sold merchandise to a foreign customer for 100,000 FCUs with payment to be received on April 30, 2018. At the date of sale, Bernard entered into a six-month forward contract to sell 100,000 FCUs. The company properly designates the forward contract as a cash flow hedge of a foreign currency receivable. The following exchange rates apply:
Date
Spot Rate
Forward Rate (to April 30, 2018)
November 1, 2017
$0.21
$0.20
December 31, 2017
0.19
0.17
April 30, 2018
0.18
N/A
Bernards incremental borrowing rate is 12 percent. The present value factor for four months at an annual interest rate of 12 percent (1 percent per month) is 0.9610.
Prepare the journal entries for the original sale, recording adjusting entries at 12/31, and the settlement on 4/30.
November 1, 2017 Journal Entries
December 31, 2017 Journal Entries
1.
2.
3.
April 30, 2017 Journal Entries
1.
2.
3.
4. Receipt of Cash
5. Change of FX to USD Cash
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
