On August 1, Year 1, Huntington Corporation placed an order to purchase merchandise from a foreign supplier
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Huntington's incremental borrowing rate is 12 percent. The present value factor for one month at an annual interest rate of 12 percent (1 percent per month) is 0.9901. Huntington Corporation must close its books and prepare its third-quarter financial statements on September 30, Year 1.
Required:
Prepare journal entries for the forward contract and firm commitment. What is the impact on net income in Year 1? What is the net cash outflow on the purchase of merchandise from the foreign customer?
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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