70.2K

Verified Solution

Link Copied!

Merit & Family purchased engines from Canada for 38,000 Canadian dollars on March 10 with payment due on June 8. Also, on March 10, Merit acquired a 90-day forward contract to purchase 38,000 Canadian dollars at C$1 = $0.50. The forward contract was acquired to manage Merit & Family's exposed net liability position in Canadian dollars, but it was not designated as a hedge. The spot rates were March 10 June 8 C$1 - $ 0.49 C$1 = $ 0.52 Required: Prepare journal entries for Merit & Family to record the purchase of the engines, entries associated with the forward contract, and entries for the payment of the foreign currency payable. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 3 4 5 6 7 > Record the foreign purchase of the engines. Note: Enter debits before credits. Date General Journal Debit Credit March 10 Journal entry worksheet Record the entry for the 90-day forward exchange contract signed to receive Canadian dollars. Note: Enter debits before credits. Date General Journal Debit Credit March 10 Journal entry worksheet Record the entry to revalue the foreign currency accounts payable to the current U.S. dollar value. Note: Enter debits before credits. Date General Journal Debit Credit June 08 Journal entry worksheet Record the payment of U.S. dollars to an exchange broker for the forward contract. Note: Enter debits before credits. Date General Journal Debit Credit June 08 Journal entry worksheet Record the receipt of Canadian dollars from the exchange broker. Note: Enter debits before credits. Date General Journal Debit Credit June 08 Journal entry worksheet

Answer & Explanation Solved by verified expert

See Answer