Question

Winn Ltd. conducted two foreign currency transactions on September 1, Year 4. In the first transaction, it sold DM750,000 in merchandise to a foreign company. Since this sale was so special, Winn agreed to collect the note receivable on September 1, Year 8. There is no risk of default on the receivable, since the customer is a very large and prosperous company. The note has an interest rate of 10% per year, payable at the end of December each year. Both the interest and the note will be paid in DMs. This receivable was not hedged in any way.
In the second transaction, Winn purchased FF1,200,000 worth of inventory from a company in another foreign country. This amount will be payable on
November 1, Year 5. There is no interest on this liability, and it is not hedged.
Required:
Prepare all the journal entries for Years 4 and 5 for the two transactions. Assume a December 31 year-end.


$1.99
Sales0
Views22
Comments0
  • CreatedJune 09, 2015
  • Files Included
Post your question
5000