Prepare dated journal entries for fleming

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Question - On June 1, 2014, Fleming Co. sold goods to BFF Ltd. for FC 200,000 and entered into a 90-day forward contract with a financial institution to deliver FC 200,000. Fleming expects to collect payment from BFF in 90 days. Fleming has a July 31 year-end. Selected exchange rates are presented below:

Spot Rate Forward rate to August 30 June 1, 2014 FC1= $1.5717 CAD FC1= $1.5702 CAD July 31, 2014 FC1= $1.5600 CAD FC1= $1.5594 CAD August 30, 2014 FC1= $1.5500 CAD

Required:

a) Prepare dated journal entries for Fleming to reflect the above transactions using the current method. Do not use hedge accounting.

b) Prepare dated journal entries for Fleming to reflect the above transactions using the net method. Do not use hedge accounting.

c) Explain how your journal entry on the settlement date would change if the receivable was hedged.

Reference no: EM132049664

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