The Following Information Pertains to Questions

question 40

Essay

The following information pertains to questions
Canada Corp.sells raw lumber to a number of countries around the world.On December 1,2013 the company shipped some lumber to a client in Japan.The selling price was established at 500,000 Yen with payment to be received on March 1,2014.
On December 3,2013 the company entered into a hedge with a Canadian Bank at the 90 day forward rate of 1Yen=$1.185CDN.
Canada Corp received the payment from its Japanese client on March 1,2014.Canada Corp's year end is on December 31.
Selected spot rates were as follows:
-Prepare the journal entries to record the receipt of the 500,000 Yen on March 1,2014,assuming that Canada Corp did not enter into a hedge transaction in December 2013.

---

Definitions:

Expenses

Monetary costs incurred in the operation of a business, leading to the creation of liabilities or decrease in assets.

Basic Accounting Equation

The fundamental equation of double-entry bookkeeping, stating that assets equal liabilities plus owner's equity.

Transaction

An agreement or exchange between two parties that has a measurable financial effect on the accounts of a business.

Accounts

Financial records of transactions that track the income, expenses, assets, liabilities, and equity of an entity.