On April 1, 2013, Smithers Sales Inc., a Canadian company, issued a purchase order to Portland...
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On April 1, 2013, Smithers Sales Inc., a Canadian company, issued a purchase order to Portland Suppliers Limited, an American company, for the purchase of some merchandise. The merchandise was to be delivered on July 15, 2013 and was to cost US$120,000. Payment was due 3 months after receipt of the merchandise. Immediately after placing the purchase order, Smithers Sales Inc. entered into a forward purchase contract to acquire US$120,000 from their bank on October 15, 2013 at a forward rate of Can$1.04 per US$1.00. The forward contract was designated as a cash flow hedge of the purchase commitment. The merchandise arrived on July 15, 2013. Smithers Sales Inc. settled the forward contract with their bank on October 15, 2013 and paid the supplier on that date. The merchandise was all sold before the end of December 2013. Exchange rates during that period were as follows: Spot rate US$1.00 = Can $1.02 US$1.00 = Can $1.05 US$1.00 = Can $1.03 US$1.00 Can$1.035 Forward rate to October 15/13 US$1.00 Can $1.04 US$1.00 = Can $1.055 US$1.00 = Can $1.045 April 1, 2013 June 30, 2013 July 15, 2013 October 15, 2013 Smithers Sales Inc. has a June 30 financial year-end. Required: a) What amounts arising from these transactions, if any, would appear on the balance sheet of Smithers Sales Inc. as at June 30, 2013: (i) accounts payable On April 1, 2013, Smithers Sales Inc., a Canadian company, issued a purchase order to Portland Suppliers Limited, an American company, for the purchase of some merchandise. The merchandise was to be delivered on July 15, 2013 and was to cost US$120,000. Payment was due 3 months after receipt of the merchandise. Immediately after placing the purchase order, Smithers Sales Inc. entered into a forward purchase contract to acquire US$120,000 from their bank on October 15, 2013 at a forward rate of Can$1.04 per US$1.00. The forward contract was designated as a cash flow hedge of the purchase commitment. The merchandise arrived on July 15, 2013. Smithers Sales Inc. settled the forward contract with their bank on October 15, 2013 and paid the supplier on that date. The merchandise was all sold before the end of December 2013. Exchange rates during that period were as follows: Spot rate US$1.00 = Can $1.02 US$1.00 = Can $1.05 US$1.00 = Can $1.03 US$1.00 Can$1.035 Forward rate to October 15/13 US$1.00 Can $1.04 US$1.00 = Can $1.055 US$1.00 = Can $1.045 April 1, 2013 June 30, 2013 July 15, 2013 October 15, 2013 Smithers Sales Inc. has a June 30 financial year-end. Required: a) What amounts arising from these transactions, if any, would appear on the balance sheet of Smithers Sales Inc. as at June 30, 2013: (i) accounts payable
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Related Book For
Cost Accounting Foundations and Evolutions
ISBN: 978-1111971724
9th edition
Authors: Michael R. Kinney, Cecily A. Raiborn
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