The invoice was payable in pesos on To hedge against rap

The invoice was payable in pesos on to hedge against

This preview shows page 11 - 14 out of 14 pages.

that cost 1,000,000 pesos. The invoice was payable in pesos on January 30, 2014. To hedge against rap entered into a forward contract on November 1, 2013 with AB Trader & Company, a US brokerage and that Mayberry would buy 1,000,000 pesos from AB Trader at $0.084 per peso for settlement on Janua Assume that all three companies are subject to the same accounting standards and have December 3 November 1, December 31, and January 30, are $0.082, $0.080, and $0.089, respectively. The 30-day 2013 is $0.083. The forward contract is not settled net. Record General Journal entries for Mayberry Corporation on November 1, December 31, and January date, indicate "no entry" in the General Journal. This is a fair value hedge.
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Working Notes: 1,000,000 * $0.082 = $82,000 1,000,000 * $0.084 = $84,000 (($0.082-0.080) * 1,000,000) = $2,000 (($0.083-0.084) * 1,000,000) = $(1,000) (($0.089-0.080) * 1,000,000) = $9,000 (($0.089-0.083) * 1,000,000) = $6,000 on, a Mexican company, some machinery pid changes in the peso, Mayberry d investment firm. The contract specified ary 30, 2014. 31st year-ends. The spot rates for pesos on y forward rate for pesos on December 31, y 30. If no entry is required on a particular
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Lisa Byrd ACC-401 Module 6 Exam 3 Question 6 Dates Accounts & Explanations Post Ref Debit Credit Working N 9/1/2014 PET Contract $2,000 Cash $2,000 12/31/2014 Other Income $2,000 PET Contract $2,000 3/1/2015 PET Contract $30,000 (($0.78-0.7 Other Income $30,000 Inventory $780,000 $0.78 * 1,0 Cash $780,000 Cash $30,000 PET Contract $30,000 Opie Industries is a manufacturer of plastic bottles. On September 1, 2014, Opie purchased an option contract purpose of the option is to hedge against increases in the price of this type of plastic, "PET." The option is to bu March 1, 2015 for $.75 per pound. If the market price of PET is below $.75 on March 1, Opie will let the option above $.75, then Opie will exercise the option. The option is to be settled net. Opie assumes a 6% annual borro cash flow hedge. Prepare the entry that Opie should record on September 1, 2014. Then, assuming that the price of PET is $.72 o year-end), prepare the entry that Opie should record. Finally, prepare the entries for March 1, 2015, assuming
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Notes: 75) * 1,000,000) = $30,000 000,000 = $780,000 at a cost of $2,000. The uy 1,000,000 pounds of PET on expire. If the market price is owing rate. Assume this is a on December 31, 2014 (Opie's that the price of PET is $.78.
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