Hull Manufacturing Corp. (HMC), a Canadian company, manufactures Inst.docx - Hull Manufacturing Corp(HMC a Canadian company manufactures Instruments

Hull Manufacturing Corp. (HMC), a Canadian company, manufactures Inst.docx

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Hull Manufacturing Corp. (HMC), a Canadian company, manufactures Instruments used to measure the moisture content of barley and wheat. The company sells primarily to the domestic market, but in Year 3 began purchasing semi- finished components from a supplier in Romania. The management of HMC is concerned about the possible adverse effects of foreign exchange fluctuations. To deal with this matter, all of HMC's foreign currency-denominated receivables and payables are hedged with contracts with the company's bank. The year-end of HMC is December 31 The following transactions occurred late in Year 4: On October 15, Year 4, HMC purchased components from its Romanian supplier for 810,000 Romanian leus (RL). On the same day, HMC entered into a forward contract for RON810,000 at the 60-day forward rate of RON1 = $0.418. The Romanian supplier was paid in full on December 15, Year 4. On December 1, Year 4. HMC made a shipment to a customer in Argentina. The selling price was 2.510,000 Argentinean pesos (ARS), with payment to be received on January 31, Year 5.
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  • Spring '19
  • Prof. Adnan Hamideh

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