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Negros Company is a Philippine Corporation operating in the Bacolod City area. Its functional currency is the Philippine peso. It entered into the following transactions in 2020. Negros' accounting year-end is December 31. 

 

I. On October, Negros purchased 1,500 shares of Nigger Inc. (a listed company in the United States of America) at a price of US$80 per share. Negros classified the investment as trading securities. The peso/US dollar exchange rates on October 1, 2020 and December 31, 2020 were 46.20 and 46.25, respectively. The price of Nigger Inc. shares at December 31, 2020 was US$100 was. 

 

II. On December 10, Negros purchased equipment from Singapore company invoiced at SNG$ 150,000 to be settled on February 28, 2016. The peso/SNG dollar exchange rates on December 10, 2020, December 31, 2020 and February 28, 2021 were 0.66, 0.70 and 0.75, respectively. 

 

Required: Write all pertinent entries for the  financial information. 

Problem:

Baliwag Corporation, a Filipino company, enters into forward exchange contract on October 1, 2020 to speculate in US Dollars. The contract is for the sale of $100,000 to the international bank for delivery on March 31, 2021. The company anticipates the dollar will weaken against the peso. Relevant exchange rates for the US dollars are as follows:

                                               10/01/20         10/31/20         3/31/21

           Spot rate                     46.90              46.00              45.60

           30-day forward            46.80              45.50              46.00

           90-day forward           46.60              45.80              45.60

           180-day forward          46.30              43.60              45.00

 

Required: write all the required journal entries in the books of Baliwag. 

     

Problem 6

Pinoy Company purchased merchandise from a foreign vendor for 100,000 FC. The merchandise is received on November 2, 2020; payment is due on January 31, 2021. Also, on November 2, 2020, Pinoy enters into a 90-day forward contract for the purchase of 100,000 FC for delivery on January 31, 2021, as a hedge of the foreign currency transaction. Relevant exchange rates for the foreign currency follow:

                                   11/2/20           12/31/20         1/31/21 

Spot rate                     0.55                0.56                0.55

30-day forward            0.56                0.58                0.57

60-day forward            0.56                0.59                0.58

90-day forward           0.57                0.58                0.59

 

Required: Write all the journal entries for the  information.

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