Question: On May 5, 2005, Roy Corp. purchased inventory from a Japanese supplier, and gave the supplier a 90-day note for 20,000,000. On the same date,

On May 5, 2005, Roy Corp. purchased inventory from a Japanese supplier, and gave the supplier a 90-day note for ¥20,000,000. On the same date, Roy entered a forward contract with its bank to receive ¥20,000,000 in 90 days. The spot rate for the yen was $0.0095. The forward rate was $0.0100.

Required:

Prepare general journal entries to record the purchase, the hedge, and final settlement of both the note and the hedge, assuming each of the following spot rates at the settlement date:

a. $0.0095

b. $0.0100

c. $0.0093

d. $0.0102

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Sure lets break this down into four parts to match the four different spot rates given Well begin by recording the initial purchase and the hedge and ... View full answer

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