On November 1, 2014, Ross Corporation, a calendar-year U.S. Corporation, invested in a purely speculative contract to
Question:
On November 1, 2014, Ross Corporation, a calendar-year U.S. Corporation, invested in a purely speculative contract to purchase 1 million euros on January 30, 2015, from Trattoria Company, an Italian brokerage firm. Ross agreed to purchase 1,000,000 euros from Trattoria at a fixed price of $1.420 per euro. Trattoria agreed to transmit 1,000,000 euros to Ross on January 30, 2015. Net settlement is not permitted. The spot rates for euros are:
Nov 01, 2014 1 euro-$1.415
Dec 31, 2014 1 euro-$1.395
Jan 30, 2015 1 euro-$1.410
The 30 day future rate for euros on December 31, 2014 was $1.405. Prepare the General Journal entries that
Ross would record on November 1, December 31, and January 30.
Financial and managerial accounting
ISBN: 978-1118016114
1st edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso