On December 15, a Company Enters into a Foreign Currency

question 67

Essay

On December 15, a company enters into a foreign currency forward to buy €300,000 at C$1.60 per euro in 30 days. The exchange rate on the day of the company's year-end of December 31 was C$1.59: €l.
Required:
Record the journal entries related to this forward contract.

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Definitions:

Net Income

The total earnings of a company after subtracting all expenses, including taxes and operational costs.

Operating Cycle

The duration of time it takes for a business to turn its inventory into cash through sales.

Merchandiser

A person or company involved in the purchase and sale of goods. In accounting, it refers to a business that sells finished goods to consumers.

Cash Sales

Transactions in which the buyer pays for a good or service with cash at the time of purchase.