A U.S. company buys merchandise on a regular basis from U.K. suppliers, with payment to be made in pounds sterling.

a. On March 20, 2024, the company takes delivery of merchandise costing £100,000 from a U.K. supplier, with payment to be made on July 20, 2024.

b. On March 20, the company enters a forward contract for delivery of £100,000 on July 20.

c. On July 20, the company closes the contract and pays the supplier.

The company has a June 30 year-end.

Spot and forward rates ($/£) are as follows:

	Spot Rate	Forward Rate for July 20, 2024 Delivery
March 20, 2024	$1.322	$ 1.330
June 30, 2024	1.346	1.344
July 20, 2024	1.339	1.339

Prepare the entries for each transaction and the adjusting journal entry (AJE) at June 30 (year-end) that the U.S. company must make to update its accounts.

Answer rating: 100% (QA)

a On March 20 2024 the company takes delivery of merchandise costing 100000 from a UK supplier with ... View the full answer