Chrysler Exporters Inc., a US wholesaler is engaged in foreign trade. The following transactions were recorded: I. On December 1, 2020, Chrysler Exporters Inc., purchased merchandise from Chang's Ltd a Japanese manufacturer. The invoice was for ¥500,000, payable on April 1, 2021. II. On the same day, Chrysler Exporters Inc. accepted a forward exchange contract (forward contract) to buy ¥500,000 on April 1, 2021. On April 1, 2021, the ¥500,000 was delivered on the contract and the supplier was settled. IV. The spot rates and the forward rates were as follows: II. Date Spot rate Forward rate for delivery (¥) on April 1, 2021 December 1, 2020 $0.0084 $0.0089 December 31, 2020 0.0083 0.0088 April 1, 2021 0.0092
Chrysler Exporters Inc., a US wholesaler is engaged in foreign trade. The following transactions were recorded: I. On December 1, 2020, Chrysler Exporters Inc., purchased merchandise from Chang's Ltd a Japanese manufacturer. The invoice was for ¥500,000, payable on April 1, 2021. II. On the same day, Chrysler Exporters Inc. accepted a forward exchange contract (forward contract) to buy ¥500,000 on April 1, 2021. On April 1, 2021, the ¥500,000 was delivered on the contract and the supplier was settled. IV. The spot rates and the forward rates were as follows: II. Date Spot rate Forward rate for delivery (¥) on April 1, 2021 December 1, 2020 $0.0084 $0.0089 December 31, 2020 0.0083 0.0088 April 1, 2021 0.0092
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Required:
a. Prepare
b. Prepare the forward contract transaction entered into on December 1, 2020.
c. Prepare the journal entries to track the accounts payable and the forward contract on December 31, 2020, for Chrysler Exporters Inc. financial statements.
Transcribed Image Text:Chrysler Exporters Inc., a US wholesaler is engaged in foreign trade. The following transactions
were recorded:
1.
On December 1, 2020, Chrysler Exporters Inc., purchased merchandise from Chang's Ltd a
Japanese manufacturer. The invoice was for ¥500,000, payable on April 1, 2021.
II.
On the same day, Chrysler Exporters Inc. accepted a forward exchange contract (forward
contract) to buy ¥500,000 on April 1, 2021.
On April 1, 2021, the ¥500,000 was delivered on the contract and the supplier was settled.
IV.
The spot rates and the forward rates were as follows:
II.
Date
Spot rate
Forward rate
for delivery (¥) on April 1, 2021
December 1, 2020
$0.0084
$0.0089
December 31, 2020
0.0083
0.0088
April 1, 2021
0.0092
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