On November 1, 20x2, Irvin Corp. sold goods to John Company for 130,000 rupee. Payment is due on March 30, 20x3. Also on November 1, 20x2, Irvin Corp. entered into a forward contract to sell 130,000 rupees on March 1, 20x3. The following are the exchange rates: Dec. 31, Nov. 1, 20x2 Mar. 30, 20x3 20x2 Spot rates 0.82 0.80 0.87 Forward rate 0.85 0.86 0.88 Irvin's incremental borrowing rate is 8%. What is the net impact on Irvin's income in 20x3 as a result of this hedge? 2.583 net gain 7,800 net gain 2,600 net gain O 7,783 net gain
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- On December 5, 20X8, Texas based Imperial Corporation purchased goods from a Saudi Arabian firm for 100,000 riyals (SAR), to be paid on January 10, 20X9. The transaction is denominated in Saudi riyals. Imperial's fiscal year ends on December 31, and its reporting currency is the U.S. dollar. The exchange rates are: December 5, 20X8 1 riyal = $ 0.265 December 31, 20X8 1 riyal = 0.262 January 10, 20X9 1 riyal = 0.264 Based on the preceding information, what journal entry would Imperial make on January 10, 20X9, to revalue foreign currency payable to equivalent U.S. dollar value?A. Accounts Payable (SAR) 300 Foreign Currency Transaction Gain 300 B. Accounts Payable (SAR) 100 Foreign Currency Transaction Gain 100 C. Foreign Currency Transaction Loss 100 Accounts Payable (SAR) 100D. Foreign Currency Transaction Loss 200 Accounts Payable (SAR) 200On March 1, 20x1, ABC Co. sold inventory to a foreign company for FC 1,000,000 (FC means foreign currency) when the spot exchange rate is FC 40: ₱1. The payment is due on April 1, 20x1. ABC Co. is concerned about the possible fluctuation in exchange rates, so on this date, ABC Co. entered into a forward contract to sell FC 1,000,000 for ₱25,000 to a broker. According to the terms of the forward contract, if FC 1,000,000 is worth less than ₱25,000 on April 1, 20x1, ABC Co. shall receive from the broker the difference; if it is worth more than ₱25,000, ABC Co. shall pay the broker the difference. If the exchange rate on April 1, 20x1 is FC35: ₱1, how much is the net cash settlement? 3,571 receipt 3,571 payment 4,231 receipt 4,231 payment If the exchange rate on April 1, 20x1 is FC50: ₱1, how much is the net cash settlement? 5,000 payment 5,000 receipt 6,223 payment 6,223 receipt If the exchange rate on March 31, 20x1 is FC45: ₱1, how much is the fair value of the…On September 1, 20x1, Creed Co. sold merchandise to a foreign enty for 250,000 francs. Terms of thesale require payment in francs on February 1, 20x2. On September 1, 20x1, the spot exchange rate wasPhp1.20 per franc. At December 31, 20x1, the spot rate was Php1.19, but the rate increased to Php1.22by February 1, 20x2, when payment was received. Requirement: Provide the journal entries in 20x1 and 20x2
- On December 12, 20X5, Dahl Company entered into three forward exchange contracts, each to purchase 100,000 francs in 90 days. The relevant exchange rates are as follows: Spot Rate Forward Rate for March 12, 20X6 December 12, 20X5 $ 0.88 $ 0.90 December 31, 20X5 0.98 0.93 1. The following information applies to Denton Incorporated’s sale of 10,000 foreign currency units under a forward contract dated November 1, 20X5, for delivery on January 31, 20X6: 11/1/X5 12/31/X5 Spot rates $ 0.80 $ 0.83 30-day forward rate 0.79 0.82 90-day forward rate 0.78 0.81 1. Denton entered into the forward contract to speculate in the foreign currency. In its income statement for the year ended December 31, 20X5, what amount of loss should Denton report from this forward contract? multiple choice $400 $300 $200 $0 2. On September 1, 20X5, Johnson Incorporated entered into a foreign exchange contract for speculative purposes by purchasing €50,000 for…(a) ABC Co has a year end of 31 December 20X1 and uses the dollar ($) as its functional currency. On 25 October 20X1 ABC Co buys goods from a Swedish supplier for Swedish Krona (SWK) 286,000. Rates of exchange: 25 October 20X1 $1 = SWK 11.16 16 November 20X1 $1 = SWK 10.87 31 December 20X1 $1 = SWK 11.02 Required: Show the accounting treatment for the above transactions if: (a) A payment of SWK286,000 is made on 16 November 20X1. (b) The amount owed remains outstanding at the year-end date.HH Inc. had the following transactions:• On May 1, HH purchased parts from a foreign company (FC1) for a Philippine pesoequivalent value of P8,400 to be paid on June 20. The exchange rates were:• On July 1, HH sold products to a foreign customer for a Philippine peso equivalent ofP10,000 to be received on August 10. Foreign company’s local currency units is the FC2. The exchange rates were:May 1 1 FC1 = P0.0070June 20 1 FC1 = P0.0075July 1 1 FC2 = P0.20August 10 1 FC2 = P0.22REQUIRED:1. Assume that the two transactions are denominated in pesos. Prepare the entriesrequired for the dates of the transactions and their settlement in pesos.2. Assume that the two transactions are D nominated in the applicable local currencyunits of the foreign entities. Prepare the interest required for the dates of thetransactions and their settlement in the local currency units of the foreign company(FC1) and foreign customer (FC2).
- On December 12, 20X5, Dahl Company entered into three forward exchange contracts, each to purchase 100,000 francs in 90 days. The relevant exchange rates are as follows: Spot Rate Forward Rate for March 12, 20X6 December 12, 20X5 $ 0.88 $ 0.90 December 31, 20X5 0.98 0.93 3. Dahl entered into the first forward contract to manage the foreign currency risk from a purchase of inventory in November 20X5, payable in March 20X6. The forward contract is not designated as a hedge. At December 31, 20X5, what amount of foreign currency transaction gain should Dahl include in income from this forward contract? multiple choice $10,000 $0 $5,000 $3,000 4. Dahl entered into the second forward contract to hedge a commitment to purchase equipment being manufactured to Dahl’s specifications. At December 31, 20X5, what amount of foreign currency transaction gain should Dahl include in income from this forward contract? multiple choice $10,000 $0 $5,000…On November 29, 20x1, ABC Co. placed a non-cancellable purchase order for the importation of a machine with a purchase price of €40,000 from a company based in France. The contract term is FOB shipping point. The machine was shipped on December 1, 20x1 and was received by ABC on December 15, 20x1. The purchase price was settled on January 3, 20x2. The following are the exchange rates: November 29, 20x1 – ₱55:€1; December 1, 20x1 – ₱58:€1; December 15, 20x1 – ₱57:€1; December 31, 20x1 – ₱60:€1; January 3, 20x2 – ₱61:€1. The entry on November 29, 20x1 includes:... a. None of the choices b. A credit to machinery for P2,320,000 c. A debit to machinery for P2,320,000 d. A debit to accounts payable for P2,320,000 pls. answer it asap thank youuOn November 29, 20x1, ABC Co. placed a non-cancellable purchase order for the importation of a machine with a purchase price of €40,000 from a company based in France. The contract term is FOB shipping point. The machine was shipped on December 1, 20x1 and was received by ABC on December 15, 20x1. The purchase price was settled on January 3, 20x2. The following are the exchange rates: November 29, 20x1 – ₱55:€1; December 1, 20x1 – ₱58:€1; December 15, 20x1 – ₱57:€1; December 31, 20x1 – ₱60:€1; January 3, 20x2 – ₱61:€1. The net adjustment to the machinery account on January 3, 20x2 is:*... a. P 120,000 decrease b. P 0 c. P 80,000 increase d. P 40,000 decrease
- On November 20, 20X5, Diamond Corporation, a calendar-year US corporation, had merchandise delivered from a vendor in France. The invoice was for 350,000 euro and was due January 20, 20X6. On December 13, 20X5, Diamond’s British division sold the merchandise and issued the customer an invoice for 400,000 pounds due February 13, 20X6. Both invoices were paid on their due date. Exchange rates were as follows: Date Euro British Pound November 20, 20X5 $1.1698 $1.6356 December 13, 20X5 1.1713 1.6317 December 31, 20X5 1.1684 1.6286 January 20, 20X6 1.1665 1.6334 February 13, 20X6 1.1652 1.6293 Record all journal entries related to the purchase and sales transactions in Diamond Corporation’s books on the following dates. Be sure to identify floating amounts with the proper foreign currency (i.e., €/euro or £/pound) for full credit. Hint - there are 6 journal entries. The journal entry dates are as follows: November 20, 20X5,…On November 20, 20X5, Diamond Corporation, a calendar-year US corporation, had merchandise delivered from a vendor in France. The invoice was for 350,000 euro and was due January 20, 20X6. On December 13, 20X5, Diamond’s British division sold the merchandise and issued the customer an invoice for 400,000 pounds due February 13, 20X6. Both invoices were paid on their due date. Exchange rates were as follows: Date Euro British Pound November 20, 20X5 $1.1698 $1.6356 December 13, 20X5 1.1713 1.6317 December 31, 20X5 1.1684 1.6286 January 20, 20X6 1.1665 1.6334 February 13, 20X6 1.1652 1.6293 Determine the net exchange gain/(loss) from the above purchase and sale transactions to be included in Diamond’s Income Statement for 20X5 and 20X6. Identify whether it is a gain or loss. 20X5 Income Statement 20X6 Income Statement[The following information applies to the questions displayed below.] Select the correct answer for each of the following questions. Note: Items 3 through 5 are based on the following: On December 12, 20X5, Dahl Company entered into three forward exchange contracts, each to purchase 100,000 francs in 90 days. The relevant exchange rates are as follows: Spot Rate Forward Rate for March 12, 20X6 December 12, 20X5 $ 0.88 $ 0.90 December 31, 20X5 0.98 0.93 2. On September 1, 20X5, Johnson Incorporated entered into a foreign exchange contract for speculative purposes by purchasing €50,000 for delivery in 60 days. The rates to exchange U.S. dollars for euros follow: 9/1/X5 9/30/X5 Spot rates $ 0.75 $ 0.70 30-day forward rate 0.73 0.72 60-day forward rate 0.74 0.73 In its September 30, 20X5, income statement, what amount should Johnson report as foreign exchange loss? multiple choice $2,500 $500 $1,500 $1,000