Flyers Inc. is a Canadian manufacturing company that produces custom windsurfing sails. During 2019, the company started
Question:
Flyers Inc. is a Canadian manufacturing company that produces custom windsurfing sails. During 2019, the company
started purchasing some of its board supplies from a reliable supplier in Europe. The company has also been
progressively generating more and more of its sales in foreign markets, such as the US. To deal with the uncertainty
associated with foreign exchange fluctuations, all of Flyers's foreign currency denominated receivables and payables are
immediately hedged with contracts with the company's chartered bank. Flyers's year-end is December 31.
The key dates and exchange spot rates relevant to these above transactions are shown below.
December 31, 2019: 1US=$1.2300 CDN
February 28, 2020: 1US=$1.3200 CDN
October 1, 2019: 1Euro=$1.6875 CDN
September 1, 2019: 1US=$1.2000 CDN
December 1, 2019: 1Euro=$1.6100 CDN
i. F/X Sale in US$:
On September 1, 2019 Flyers sold a full container of its sails to a large American retailer for $100,000US at 6 month
terms. On September 1, 2019 the company entered into a forward contract for $100,000US at the 6-month forward rate of
$1US=$1.3000 CDN. The terms of the invoice required that Flyers receive its payment in full by March 1, 2020. At
December 31, 2019 the 2-month forward rate was $1US=$1.2700CDN.
Required: Prepare the necessary journal entries required on March 1, 2020 regarding the $100,000 US sale transaction.
Explanations not required.
Expert Answer:
Journal Entries for Flyers Inc on March 1 2020 regarding the 100000 US sale 1 Recognize receipt of p... View the full answer
