Question
In: Accounting
On November 1, 2017, Bernard Company (a U.S.-based company) sold merchandise to a foreign customer for...
On November 1, 2017, Bernard Company (a U.S.-based company) sold merchandise to a foreign customer for 230,000 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 230,000 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 |
||||
|
November 1, 2017 |
$ |
0.34 |
$ |
0.33 |
||
|
December 31, 2017 |
0.32 |
0.30 |
||||
|
April 30, 2018 |
0.31 |
N/A |
||||
Bernard's 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.
1.Prepare all journal entries, including December 31 adjusting entries, to record the sale and forward contract.
2.What is the impact on net income in 2017?
3.What is the impact on net income in 2018?
Solutions
ekkarill92 answered 1 year agoRelated Solutions
On November 1, 2017, Bernard Company (a U.S.-based company) sold merchandise to a foreign customer for...
On November 1, 2017, Bernard Company (a U.S.-based company) sold
merchandise to a foreign customer for 120,000 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 120,000 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
$
0.23
$...
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into a six-month forward contract to sell 150,000 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
$
0.26
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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)
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$
0.30
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be received on April 30, 2018. At the date of sale, Bernard entered
into a six-month forward contract to sell 170,000 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
$
0.28
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On November 1, 2017, Bernard Company (a U.S.-based company) sold merchandise to a foreign customer for...
On November 1, 2017, Bernard Company (a U.S.-based company) sold
merchandise to a foreign customer for 120,000 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 120,000 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
$
0.23
$...
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