test chapters 11, 12, 14-1

test chapters 11, 12, 14-1 - Acct 412 Test Chapters 11, 12,...

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Unformatted text preview: Acct 412 Test Chapters 11, 12, 14 Spring 2005 Name:____________________ Problem 1. 49 pts. On August 1, 2003, a U.S. company signed a noncancelable order to purchase a machine from a company located in Japan. The contracted price was 6,000,000 yen, payable on January 31, 2004. The machine will be delivered to the U.S. company on November 1, 2003. In order to hedge against a strengthening of the yen, the U.S. company entered into a forward exchange contract on August 1, 2003, to purchase 6,000,000 yen on January 31, 2004. On November 1, 2003, the transaction date, the U.S. company received the machine from the Japanese company. Spot and forward exchange rates on various dates follow: Spot Rate ($/1 yen) Forward Exchange Rate ($/1 yen) August 1, 2003 $.0080 $.0084 November 1, 2003 $.0085 $.0087 December 31, 2003 $.0083 $.0086 January 31, 2004 $.0090 Required: A. Prepare the required journal entries as listed below. Assume a December 31 year-end. 8/01/03 purchase of forward contract 11/01/03 Adjust receivable from the broker 11/01/03 Record gain or loss on firm commitment Acct 412 Test Chapters 11,12,14 11/01/03 Record purchase of machinery 12/31/03 - Adjust foreign currency payable to machine dealer...
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This note was uploaded on 03/14/2010 for the course ACC 412 taught by Professor Smith during the Spring '10 term at Malone.

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test chapters 11, 12, 14-1 - Acct 412 Test Chapters 11, 12,...

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