Question

Pinware Wholesalers Inc. (Pinware) imports high quality goods from select European countries. On May 1, 20X3, Pinware purchased Swiss watches from a supplier in Switzerland for 400,000 Swiss francs (CHF). Payment of the invoice was due on August 31, 20X3. On May 1, 20X3, Pinware also entered into a forward contract that was a perfect hedge of the full amount of the invoice price at a rate of CHF1 C$ 0.945. Pinware’s year-end is June 30 and, on June 30, the August 31, 20X3, forward rate is CHF1 C$ 0.925. On August 31, 20X3, the forward contract was settled and the Swiss supplier was paid. The relevant spot rates were as follows:
May 1, 20X3........................ CHF1 = C$ 0.930
June 30, 20X3...................... CHF1 = C$ 0.920
August 31, 20X3..................... CHF1 = C$ 0.915

Required
Prepare all relevant journal entries to record the transactions related to the purchase of the watches. Be sure to include any year-end adjustments required on June 30, 20X3.



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  • CreatedMarch 13, 2015
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