Question: Hedged Purchase Commitment and Foreign-Currency-Denominated Liability On September 15, 2014, the Hawkins Corporation, a U.S. company, agreed to purchase 10,000 PDAs from a Mexican supplier

Hedged Purchase Commitment and Foreign-Currency-Denominated Liability On September 15, 2014, the Hawkins a U.S. company, agreed to purchase 10,000 PDAs from a Mexican supplier for a total invoice price of 15,000,000 pesos. The PDAs are received on November 15 and payment is made on January 15, 2015. Concurrently, on September 15, 2014, Hawkins purchased 15,000,000 pesos for delivery on January 15, 2015, for payment of the invoice price. Hawkins closes its books on December 31. Relevant exchange rates ($/peso) are as follows:

Required
Prepare the journal entries made by Hawkins to record the above events, including any required year-end adjusting entries.

Forward Rate for Delivery on January 15, 2015 Spot Rate September 15, 2014. November December 31,2014 January 15,2015 $0.102 0.103 0.105 0.108 $0.104 0.105 0.107 0.108 15, 2014

Step by Step Solution

★★★★★

3.46 Rating (166 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

September 15 2014 No entry November 15 2014 Investment in forward contract 15000 Exchange gain 15000 ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

900-B-A-A-D (779).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!

Hedging Foreign-Currency-Denominated Liability On March 15, 2014, Schaeffer Corporation purchased goods from a South Korean company at an invoice price of 20,000,000 won (W); payment is due on April...

A company has acquired two derivatives: an option to buy foreign currency (FC) and a forward contract to buy FC. Both derivatives were acquired on the same day, for the same notional amount and...

Hedged Sale Commitment and Foreign-Currency-Denominated Asset The Stanley Company, a calendar-year U.S. corporation, manufactures various filter materials. On April 15, 2013, Stanley received an...

Look at the notes to the Campbell Soup financials in your text or in the module in Canvas. What do the notes say about the inventory cost flow assumptions used? Why do you think this is important...

Question 3 (a) Compute the 2014 inventory turnover ratio and the days in inventory ratio. Note: what Groupon calls finished goods inventory is really merchandise inventory. Further, these...

ANSWER ALL THE QUESTIONS Question 1 Khaki & Sons Limited (KSL) is a family business that deals in car spare parts. It is one of the largest dealers in car spare parts in Uganda. Since inception in...

Need ONLY an answer to Part C, step 1, questions 1 and 3. Term Project Part A: Understanding Financial Statements Locate and use an annual report STEP 1: The Company Assigned to you Find the most...

Data for Martinez, Inc. and Rosario Corp. follow: Requirements 1. Prepare common-size income statements. 2. Which company earns more net income? 3. Which companys net income is a higher percentage of...

At a Midwestern hospital there were a total of 932 births in 20 consecutive weeks. Of these births, 216 occurred on weekends.26 Do these data reveal more than chance deviation from random timing of...

The 1 9 3 4 Act is primarly intended to ( A ) mainaila the integity of the secenclary market for securitity make sure companies who wish to raise money by the sale of securities comply with dsclorure...

4. Why did Warner Brothers make a mistake by waiting until the filming of Analyze This was almost finished before negotiating with Tony Bennett to perform in the final scene? (LO3)

What are the major revenue groupings of hospitals? Give an example of a revenue item that would be included in each grouping.

Describe the difference in a set of financial statements for a governmental university and a private not for profit university.

The portfolios on the efficient frontier dominate all other portfolios because given a specific level of expected return a . they carry minimal systematic risk b . they minimize risk c . they...

6. Lang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $208,000, has a four-year life, and requires $67,000 in pretax annual...

What is hdlc potocol policy and mechanisms?