On November 1,2013, Ironside Company (a U.S.manufacturer)sold an airplane for 1 million New Zealand dollars (NZ$)to...

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On November 1,2013, Ironside Company (a U.S.manufacturer)sold an airplane for 1 million New Zealand dollars (NZ$)to a New Zealand company, Wellington Corporation. Ironside will receive payment on January 30,2014 in New Zealand dollars. In order to hedge the accounts receivable position,Ironside entered into a 90-day forward contract on November 1,2013 to sell 1 million New Zealand dollars. On November 1,2013,the forward rate is US$0.79 per New Zealand dollar. The forward contract will be settled net. This is a fair value hedge.Ignore the time value of money. The relevant exchange rates per New Zealand dollar: Spot Rate Forward Rate to 1/30/14 Nov. 1, 2013 US$0.79 US$0.79 Dec. 31, 2013 US$0.75 JS$0.76 Jan. 30, 2014 US$0.73 US$0.73 Required: Record the journal entries that Stateside would need to prepare at November 1,2013, December 31,2013 and January 30,2014. December 31 is the fiscal year end. On November 1,2013, Ironside Company (a U.S.manufacturer)sold an airplane for 1 million New Zealand dollars (NZ$)to a New Zealand company, Wellington Corporation. Ironside will receive payment on January 30,2014 in New Zealand dollars. In order to hedge the accounts receivable position,Ironside entered into a 90-day forward contract on November 1,2013 to sell 1 million New Zealand dollars. On November 1,2013,the forward rate is US$0.79 per New Zealand dollar. The forward contract will be settled net. This is a fair value hedge.Ignore the time value of money. The relevant exchange rates per New Zealand dollar: Spot Rate Forward Rate to 1/30/14 Nov. 1, 2013 US$0.79 US$0.79 Dec. 31, 2013 US$0.75 JS$0.76 Jan. 30, 2014 US$0.73 US$0.73 Required: Record the journal entries that Stateside would need to prepare at November 1,2013, December 31,2013 and January 30,2014. December 31 is the fiscal year end.

Answer rating: 100% (QA)

Journal Entries Date Account Debit Credit 2013 Nov Cash 624100 Accounts R... View the full answer