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83. Coyote Corp. (a U.S. company in Texas) had the following series of
transactions in a foreign country during 2011:
The appropriate exchange rates during 2011 were as follows:
What amount will Coyote Corp. report in its 2011 income statement for
Cost of
goods sold
?
84. Coyote Corp. (a U.S. company in Texas) had the following series of
transactions in a foreign country during 2011:
The appropriate exchange rates during 2011 were as follows:
What amount will Coyote Corp. report in its 2011 income statement for
Sales
?
85. Coyote Corp. (a U.S. company in Texas) had the following series of
transactions in a foreign country during 2011:
The appropriate exchange rates during 2011 were as follows:
What amount will Coyote Corp. report in its 2011 balance sheet for
Accounts
receivable
?
86. Coyote Corp. (a U.S. company in Texas) had the following series of
transactions in a foreign country during 2011:
The appropriate exchange rates during 2011 were as follows:
What amount will Coyote Corp. report in its 2011 balance sheet for
Accounts
payable
?
87. Coyote Corp. (a U.S. company in Texas) had the following series of
transactions in a foreign country during 2011:
The appropriate exchange rates during 2011 were as follows:
The beginning balance of cash was 50,000 pesos on January 1, 2011, translated
at 1 peso = $.18. What amount will Coyote Corp. report in its 2011 balance sheet
for
Cash
?
88. On November 10, 2011, King Co. sold inventory to a customer in a foreign
country. King agreed to accept 96,000 local currency units (LCU) in full payment
for this inventory. Payment was to be made on February 1, 2012. On December 1,
2011, King entered into a forward exchange contract wherein 96,000 LCU would
be delivered to a currency broker in two months. The two month forward
exchange rate on that date was 1 LCU = $.30. Any contract discount or premium
is amortized using the straight-line method. The spot rates and forward rates on
various dates were as follows:
89. On November 10, 2011, King Co. sold inventory to a customer in a foreign
country. King agreed to accept 96,000 local currency units (LCU) in full payment
for this inventory. Payment was to be made on February 1, 2012. On December 1,
2011, King entered into a forward exchange contract wherein 96,000 LCU would
be delivered to a currency broker in two months. The two month forward
exchange rate on that date was 1 LCU = $.30. Any contract discount or premium
is amortized using the straight-line method. The spot rates and forward rates on
various dates were as follows:
The company's borrowing rate is 12%. The present value factor for one month is
.9901.
90. On October 1, 2011, Jarvis Co. sold inventory to a customer in a foreign
country, denominated in 100,000 local currency units (LCU). Collection is
expected in four months. On October 1, 2011, a forward exchange contract was
acquired whereby Jarvis Co. was to pay 100,000 LCU in four months (on February
1, 2012) and receive $78,000 in U.S. dollars. The spot and forward rates for the
LCU were as follows:
The company's borrowing rate is 12%. The present value factor for one month is
.9901.
Any discount or premium on the contract is amortized using the straight-line
method.
Assuming this is a cash flow hedge; prepare journal entries for this sales
transaction and forward contract.
91. On October 1, 2011, Jarvis Co. sold inventory to a customer in a foreign
country, denominated in 100,000 local currency units (LCU). Collection is
expected in four months. On October 1, 2011, a forward exchange contract was
acquired whereby Jarvis Co. was to pay 100,000 LCU in four months (on February
1, 2012) and receive $78,000 in U.S. dollars. The spot and forward rates for the
LCU were as follows:
The company's borrowing rate is 12%. The present value factor for one month is
.9901.
92. On October 31, 2010, Darling Company negotiated a two-year 100,000
franc loan from a foreign bank at an interest rate of 3 percent per year. Interest
payments are made annually on October 31, and the principal will be repaid on
October 31, 2012. Darling prepares U.S.-dollar financial statements and has a
December 31 year-end. Prepare all journal entries related to this foreign currency
borrowing assuming the following:
93. For each of the following situations, select the best answer concerning
accounting for foreign currency transactions:
(G) Results in a foreign exchange gain.
(L) Results in a foreign exchange loss.
(N) No foreign exchange gain or loss.
_____1. Export sale by a U.S. company denominated in dollars, foreign currency of
buyer appreciates.
_____2. Export sale by a U.S. company denominated in foreign currency, foreign
currency of buyer appreciates.
_____3. Import purchase by a U.S. company denominated in foreign currency,
foreign currency of buyer appreciates.
_____4. Import purchase by a U.S. company denominated in dollars, foreign
currency of buyer appreciates.
_____5. Import purchase by a U.S. company denominated in foreign currency,
foreign currency of buyer depreciates.
_____6. Import purchase by a U.S. company denominated in dollars, foreign
currency of buyer depreciates.
_____7. Export sale by a U.S. company denominated in dollars, foreign currency of
buyer depreciates.
_____8. Export sale by a U.S. company denominated in foreign currency, foreign
currency of buyer depreciates.
