2010-10-19_011809_Advanced1213

2010-10-19_011809_Advanced1213 - Exercise 12-6 Agentel...

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Unformatted text preview: Exercise 12-6 Agentel Corporation is a U.S. based importing-exporting company. The company entered into the following transactions during the month of November. Nov. 6 Purchased merchandise from AGT, a Swiss firm, for 600,000 francs. 5 Sold merchandise to SLS Inc, a firm located in rio De Janeiro, for $200,000. 18 Sold merchandise to TNT, Ltd., a British firm, for 130,000 pounds. 20 Purchased merchandise from SDS, Ltd., a British firm, for $160,000. All the transactions were unsettled at December 31, Agentels fiscal year-end. Spot rates are as follows: Currency Date Franc Real Pound November 6 $.490 $.412 $1.520 November 15 $.487 $.409 $1.509 November 18 $.476 $.414 $1.506 November 20 $.468 $.405 $1.498 November 31 $.460 $.398 $1.482 A. Compute the amount that Agentel would report for each unsettled receivable and payable in its balance sheet prepared at December 31. B. Compute the transactions gain or loss on each unsettled receivable and payable that would be reported in the income statement prepared for the year ended December 31. Exercise 12-7 ASI recently completed the development and installation of an accounting information system for a company located in Rio De Janeiro, Brazil. The company considered that all revenue realization criteria were satisfied and accordingly recorded on October 2, 2008, a receivable from the foreign company. The receivable is to be settled in 120 days on February 1 by the delivery of 300,000 Real. To hedge against an unfavorable change in the foreign exchange rate, ASI acquired a forward contract to sell 300,000 real on February 1 for $.4730 per real. The following exchange rates were quoted: Date Spot Rate Forward Rate (Delivery on 2/1) October 2 $.4737 $.4730 December 31 $.4895 $.4810 February 1 $.4950-- ASI is a calendar-year company. A. Prepare the journal entries to record the transactions, adjust the accounts on December 31, and settle the receivable and forward contract on February 1. B. (1) Based on the data given above, complete the following table. 2008 2009 Revenue _______ _________ Transaction gain (loss) related to the exposed receivable bal. _______ _________ Transaction gain (loss) related to the forward contract _______ _________ Effect on net income _______ _________ (2) What was the cumulative effect on net income (ie., 2008 plus 2009)? (3) How much cash was received when the account was settled? Pr 12-2 Crystal Exporting Co. is a U.S. wholesaler engaged in foreign trade. The following transactions are representative of its business dealings. The company used a periodic inventory system and is ona calendar-year basis. All exchange rates are direct quotations. Dec. 1 Crystal Exporting purchased merchandise from Changs Ltd., a Hong Kong manufacturer. The invoice was 210,000 Hong Kong dollars, payable on April 1. On this same date, Crystal Exporting acquired a forward contract to buy 210,000 Hong Kong dollars on April 1 for $.1314....
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2010-10-19_011809_Advanced1213 - Exercise 12-6 Agentel...

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