Reference no: EM133051992

Question - Shelton Corporation of Manila, Philippines is an international dealer in jewelry and engages in numerous import and export activities. Shelton's receivables and payables in foreign currency units before year-end adjustments on December 31, 2008, are summarized below:

Foreign Currency	Currency Units	Rate on Date of Transaction	Per books in Phil. Pesos	Current Rate on 12/31/08
Accounts Receivable denominated in Foreign Currency
British pounds	100,000	P1.6500	P165,000	P1.6600
Euros	250,000	0.6600	165,000	0.6700
Swedish krona	160,000	0.6600	105,600	0.6400
			P450,600
Accounts payable denominated in Foreign Currency
Canadian dollars	150,000	P0.7000	P105,000	P0.6900
Mexican pesos	220,000	0.1300	28,600	0.1350
Japanese yen	4,500,000	0.0074	33,300	0.0076
			P166,900

Required -

1. Determine the amount at which the receivables and payables should be reported in Shelton's December 31, 2008, statement of financial position.

2. Calculate individual gains and losses on each of the receivables and payables and the net exchange gain or loss that should appear in Shelton's 2008 statement of comprehensive income.

3. Assume that Shelton wants to hedge its exposure to amounts denominated in Euros, should it buy or sell Euros for future delivery? In what amount or amounts?