Foreign currency hedge, existing receivable
Not what you're looking for?
On April 1, 2006, Baylor Corporation delivers merchandise to Rameau Corporation for 200,000 pesos when the spot rate for pesos is 6.0496 pesos. The receivable from Rameau is due May 30. Also on April 1, Baylor hedges its foreign currency asset and enters into a 60 day forward contract to sell 200,000 pesos at a forward rate of 6.019 pesos. The spot rat on May 30 was 5.992 pesos.
1. Prepare journal entries to record the receivable from the sales transaction and the forward contract on April 1
2. Prepare journal entries to record collection of the receivable and settlement of the forward contract on May 30
Purchase this Solution
Solution Summary
The expert examines foreign currency hedge for existing receivables.
Solution Preview
Dear Student,
Thank you for using BM.
Below are my answers.
Sincerely,
Anna Liza Gaspar
ANSWERS
Requirement 1
DR: Accounts receivable 33,060.04
CR: Sales ...
Purchase this Solution
Free BrainMass Quizzes
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.
Organizational Leadership Quiz
This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.
Academic Reading and Writing: Critical Thinking
Importance of Critical Thinking
Business Ethics Awareness Strategy
This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.