Problemon october 1 2016 usa company sold some chairs to, Ask an Expert

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On October 1, 2016 USA Company sold some chairs to Mexico Company for 500,000 pesos when the peso was worth 10 cents. Payment is due April 1, 2017.

On October 2nd, USA enters into a forward contract when the 6 monthforward price was 1 peso = .09 cents. Use 12% for interest.

On December 31, the peso is worth 8 cents.Tthe 3 month forward rate is 1 peso = 7 cents

On April 1, the peso is worth 11 cents and Mexico Company pays its bill.

REQUIRED:

1. MAKE ALL THE NECESSARY JOURNAL ENTRIES FOR USA COMPANY IN 2016 AND 2017. Remember, USA entered into a covered forward contract on October 2nd.

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Category:- Accounting Basics
Reference No.:- M92770306

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