Prepare journal entries for the purchase transaction held on December 1, 2020. Prepare the forward contract transaction entered into on December 1, 2020. Prepare the journal entries to track the accounts payable and the forward contract on December 31, 2020, for Chrysler Exporters Inc. financial statements.
Prepare journal entries for the purchase transaction held on December 1, 2020. Prepare the forward contract transaction entered into on December 1, 2020. Prepare the journal entries to track the accounts payable and the forward contract on December 31, 2020, for Chrysler Exporters Inc. financial statements.
Fundamentals of Financial Management (MindTap Course List)
14th Edition
ISBN:9781285867977
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter19: Multinational Financial Management
Section: Chapter Questions
Problem 6P
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Question
REQUIRED
- Prepare
journal entries for the purchase transaction held on December 1, 2020. - Prepare the forward contract transaction entered into on December 1, 2020.
- Prepare the journal entries to track the accounts payable and the forward contract on December 31, 2020, for Chrysler Exporters Inc. financial statements.
Transcribed Image Text:Question 3
Chrysler Exporters Inc., a US wholesaler is engaged in foreign trade. The following transactions
were recorded:
On December 1, 2020, Chrysler Exporters Inc., purchased merchandise from Chang's Ltd a
I.
Japanese manufacturer. The invoice was for ¥500,000, payable on April 1, 2021.
On the same day, Chrysler Exporters Inc. accepted a forward exchange contract (forward
II.
contract) to buy ¥500,000 on April 1, 2021.
On April 1, 2021, the ¥500,000 was delivered on the contract and the supplier was settled.
The spot rates and the forward rates were as follows:
III.
IV.
Date
Spot rate
Forward rate
for delivery (¥) on April 1, 2021
December 1, 2020
$0.0084
$0.0089
December 31, 2020
0.0083
0.0088
April 1, 2021
0.0092
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