Early August Maker USA anticipated the purchase of inventory around October 2020 from a foreign company at a cost of 1,000,000 foreign currency units (FCU). On 8/10/2020, Maker paid $12,000 to purchase a call option to buy 1 million FCU at a strike price of $0.255 expiring end of year. On October 15, 2020, the option was settled and inventory purchased and paid. 08/10/2020 08/31/2020 09/30/2020 10/15/2020 Spot Rate $0.253 $0.310 $0.362 $0.275 FV of Option $12,000 $13,500 $10,000 Required: Prepare the entries on the dates listed (Maker prepared monthly financial statements).
Early August Maker USA anticipated the purchase of inventory around October 2020 from a foreign company at a cost of 1,000,000 foreign currency units (FCU). On 8/10/2020, Maker paid $12,000 to purchase a call option to buy 1 million FCU at a strike price of $0.255 expiring end of year. On October 15, 2020, the option was settled and inventory purchased and paid. 08/10/2020 08/31/2020 09/30/2020 10/15/2020 Spot Rate $0.253 $0.310 $0.362 $0.275 FV of Option $12,000 $13,500 $10,000 Required: Prepare the entries on the dates listed (Maker prepared monthly financial statements).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Early August Maker USA anticipated the purchase of inventory around October 2020 from a foreign company at a cost of 1,000,000 foreign currency units (FCU). On 8/10/2020, Maker paid $12,000 to purchase a call option to buy 1 million FCU at a strike price of $0.255 expiring end of year. On October 15, 2020, the option was settled and inventory purchased and paid.
|
|
08/10/2020 |
08/31/2020 |
09/30/2020 |
10/15/2020 |
|
Spot Rate |
$0.253 |
$0.310 |
$0.362 |
$0.275 |
|
FV of Option |
$12,000 |
$13,500 |
$10,000 |
|
- Required: Prepare the entries on the dates listed (Maker prepared monthly financial statements).
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