Hull Manufacturing Corp. (HMC), a Canadian company, manufactures instruments used to measure the moisture content of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Hull Manufacturing Corp. (HMC), a Canadian company, manufactures instruments used to measure the moisture content of barley and wheat. The company sells primarily to the domestic market, but in Year 3, it developed a small market in Argentina. In Year 4, HMC began purchasing semi-finished components from a supplier in Romania. The management of HMC is concerned about the possible adverse effects of foreign exchange fluctuations. To deal with this matter, all of HMC's foreign-currency-denominated receivables and payables are hedged with contracts with the company's bank. The year-end of HMC is December 31. The following transactions occurred late in Year 4: • On October 15, Year 4, HMC purchased components from its Romanian supplier for 803,000 Romanian leus (RL). On the same day, HMC entered into a forward contract for RON803,000 at the 60-day forward rate of RON1 = $0.411. The Romanian supplier was paid in full on December 15, Year 4. • On December 1, Year 4, HMC made a shipment to a customer in Argentina. The selling price was 2,503,000 Argentinean pesos (ARS), with payment to be received on January 31, Year 5. HMC immediately entered into a forward contract for ARS2,503,000 at the two-month forward rate of ARS1 = $0.229. During this period, the exchange rates were as follows: Forward Rates Spot Rates RON1 = $0.398 October 15, Year 4 December 1, Year 4 December 15, Year 4 December 31, Year 4 ARS1= 0.252 RON1 = $0.390 ARS1 = $0.236 ARS1 $0.225 Hedge accounting is not adopted. Required: (a) Prepare the Year 4 journal entries to record the transactions described above and any year-end adjusting entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list 10 1 Record the purchase of inventory. 2 Record the forward contract entered for Romanian leus 3 Record the forward contract entered for Argentinean pesos 4 Record the forward contact. Credit 5 Revalue accounts payable at fair value. 6 Revalue forward contract at fair value. 7 Record the receipt from bank. Note : = journal entry has been entered Record entry Clear entry View general Journal (b) Prepare the December 31, Year 4, balance sheet presentation of the receivable from the Argentinean customer, and the accounts associated with the forward contract. (Omit $ sign in your response.) Hull Manufacturing Corp. Balance Sheet as at December 31, Year 4 Assets Account receivable $ Forward contract. $ Hull Manufacturing Corp. (HMC), a Canadian company, manufactures instruments used to measure the moisture content of barley and wheat. The company sells primarily to the domestic market, but in Year 3, it developed a small market in Argentina. In Year 4, HMC began purchasing semi-finished components from a supplier in Romania. The management of HMC is concerned about the possible adverse effects of foreign exchange fluctuations. To deal with this matter, all of HMC's foreign-currency-denominated receivables and payables are hedged with contracts with the company's bank. The year-end of HMC is December 31. The following transactions occurred late in Year 4: • On October 15, Year 4, HMC purchased components from its Romanian supplier for 803,000 Romanian leus (RL). On the same day, HMC entered into a forward contract for RON803,000 at the 60-day forward rate of RON1 = $0.411. The Romanian supplier was paid in full on December 15, Year 4. • On December 1, Year 4, HMC made a shipment to a customer in Argentina. The selling price was 2,503,000 Argentinean pesos (ARS), with payment to be received on January 31, Year 5. HMC immediately entered into a forward contract for ARS2,503,000 at the two-month forward rate of ARS1 = $0.229. During this period, the exchange rates were as follows: Forward Rates Spot Rates RON1 = $0.398 October 15, Year 4 December 1, Year 4 December 15, Year 4 December 31, Year 4 ARS1= 0.252 RON1 = $0.390 ARS1 = $0.236 ARS1 $0.225 Hedge accounting is not adopted. Required: (a) Prepare the Year 4 journal entries to record the transactions described above and any year-end adjusting entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list 10 1 Record the purchase of inventory. 2 Record the forward contract entered for Romanian leus 3 Record the forward contract entered for Argentinean pesos 4 Record the forward contact. Credit 5 Revalue accounts payable at fair value. 6 Revalue forward contract at fair value. 7 Record the receipt from bank. Note : = journal entry has been entered Record entry Clear entry View general Journal (b) Prepare the December 31, Year 4, balance sheet presentation of the receivable from the Argentinean customer, and the accounts associated with the forward contract. (Omit $ sign in your response.) Hull Manufacturing Corp. Balance Sheet as at December 31, Year 4 Assets Account receivable $ Forward contract. $
Expert Answer:
Answer rating: 100% (QA)
1 Date Particulars Debit Credit 1510 year 4 Inventory account 803000 0398 319594 Accounts ... View the full answer
Related Book For
Modern Advanced Accounting in Canada
ISBN: 978-1259087554
7th edition
Authors: Hilton Murray, Herauf Darrell
Posted Date:
Students also viewed these accounting questions
-
The figure shown below is the heating curve obtained by heating 21.9 g of water from-10.0 to 140.0C. The region labeled a represents the heating of ice to its melting point; the region b represents...
-
A hygrometer is used to measure the moisture content of humid air. Calibration of the instrument leads to a straight line on a semi log plot of y, the mole fraction of water in air (logarithmic...
-
A company has entered into a forward contract for the purchase of gold, in 2 years, for $1300/oz. Does this arrangement meet the definition of a derivative? Analyze all required parts of the...
-
Read each case carefully and, as determined in the Internal Revenue Code of Puerto Rico, identify the deductions, calculate the amount of deductions and what the determined contribution would be. and...
-
What methods are used to increment time in a simulation model? How do they work?
-
B&K grocery store sells three types of soft drinks: the brand names Al Cola and A2 Cola and the cheaper store brand BK Cola. The price per can for Al, A2, and BK are 80, 70, and 60 cents,...
-
What is the role of the paralegal during trial? What ethical considerations should govern your conduct during the trial?
-
The following selected circumstances relate to pending lawsuits for Erismus, Inc. Erismuss fiscal year ends on December 31. Financial statements are published in March 2012. Erismus prepares its...
-
Two shafts x and y are in the same line (axis in one line). They are geared together through an intermediate parallel shaft carrying wheels B and C which mesh with the wheels on A and D respectively,...
-
An article by J. J. Pignatiello, Jr. and J. S. Ramberg in the Journal of Quality Technology (Vol. 17, 1985, pp. 198- 206) describes the use of a replicated fractional factorial to investigate the...
-
4. Let a, b be integers and p a prime number. Suppose that gcd (a, p) = p and that gcd (b, p4)=p. Find all possible values of (a) gcd (ab, p5). (b)gcd(a+b, p4)
-
Consider a 1.00 m magnesium nitrate, Mg(NO3)2, aqueoussolution. a. Determine the molality (in m) of all solutes in the solution.Assume that magnesium nitrate completely ionizes when dissolved...
-
An investment promises to pay a perpetuity of $100 per year starting from today. If the discount rate is 10% per year, how much should you pay for this investment?
-
There is a close relationship between resilience and sustainability. However, there is some uncertainty surrounding the nature of this relationship. Some researchers consider resilience a...
-
discuss the impact of negative interest rates on deposit behavior, exploring the economic rationale behind this unconventional monetary policy tool and its effects on consumer saving habits, bank...
-
1. Locate a deed from Texas and then answer the following questions: What language does the deed have concerning consideration? Explain what the covenant of seizin is. Does the deed contain a...
-
Market demand for lunches for people taking all day rafting trips on the river. Georgios has a firm providing this service, and his marginal cost and the average cost for each lunch are a constant...
-
Below is a sample of the data in the file NFLAttendance which contains the 32 teams in the National Football League, their conference affiliation, their division, and their average home attendance....
-
How is goodwill determined at the date of acquisition? Describe the nature of goodwill .
-
Briefly summarize the accounting issues arising from foreign currency denominated transactions.
-
The realization of intercompany inventory and depreciable asset profits is really an adjustment made in the preparation of consolidated income statement s to arrive at historical cost numbers....
-
Recording effects of transactions in T-accounts Record the transactions below for Amena Company by recording debit and credit amounts directly in the following T-accounts: Cash; Accounts Receivable;...
-
Identifying type and normal balances of accounts For each of the following (1) identify the type of account as an asset, liability, equity, revenue, or expense, (2) enter debit (Dr.) or credit (Cr.)...
-
Preparing a trial balance After recording the transactions of Exercise 3-2 in T-accounts and calculating the ending balance of each account, prepare a trial balance. Use May 31, 2008, as its report...
Study smarter with the SolutionInn App