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Hedge: Direct Currency Exchange Rate Adjust the value of forward contract for currency gain/loss at...

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Hedge: Direct Currency Exchange Rate Adjust the value of forward contract for currency gain/loss at settlement date 25,000,000 Japanese Yen0.013655 Amount 1/15/2013 Date Debit Credit Adj. A/P Balance At 12/31/12 25,000,000 Cash Impact At 1/15/13 Account 1/15/2013 YEN) FC Receivable from Exchange Dealer 12,500 25,000,000 12,500 $ 0.013155$0.013655 $328,875 $341,375 Transaction Gain Cash payment for YEN (receipt of YEN) and settlement of accounts payable (paid 25,000,000 YEN) $315,625 Cash - Paid to dealer for YEN purchased per contract 1/15/2013 (SUS) Dollars Payable to Exchange Dealer 315,625 Investment in FC (YEN Rec'd from Exchange Dealer) 341,375 (YEN) FC Receivable from Exchange Dealer $ 341,375 Accounts Payable (25,000,000 YEN) 341,375 Investment in FC (YEN Rec'd from Exchange Dealer) 341,375 Short Answer - Calculate the net transaction gain/loss when combining the transaction related entries and the hedge related entries. Show your work Q8. Short Answer- Was the answer to question 7 (above) more readily available than having to calculate all the related transaction gain/loss entries? Explain

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