Question 3 Chrysler Exporters Inc., a US wholesaler is engaged in foreign trade. The following transactions were recorded: 1. On December 1, 2020, Chrysler Exporters Inc., purchased merchandise from Chang's Ltd a Japanese manufacturer. The invoice was for ¥500,000, payable on April 1, 2021. II. On the same day, Chrysler Exporters Inc. accepted a forward exchange contract (forward contract) to buy ¥500,000 on April 1, 2021. II. On April 1, 2021, the ¥500,000 was delivered on the contract and the supplier was settled. IV. The spot rates and the forward rates were as follows: 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
Question 3 Chrysler Exporters Inc., a US wholesaler is engaged in foreign trade. The following transactions were recorded: 1. On December 1, 2020, Chrysler Exporters Inc., purchased merchandise from Chang's Ltd a Japanese manufacturer. The invoice was for ¥500,000, payable on April 1, 2021. II. On the same day, Chrysler Exporters Inc. accepted a forward exchange contract (forward contract) to buy ¥500,000 on April 1, 2021. II. On April 1, 2021, the ¥500,000 was delivered on the contract and the supplier was settled. IV. The spot rates and the forward rates were as follows: 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
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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REQUIRED
- Prepare the
journal entries for the settlement of the contracts on April 1, 2021. - What is the value of the forward contract?
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