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Prepare dylex importing ltd entries to record the purchase

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Reference no: EM132672176

Dylex Importing Ltd. (DIL) imports goods from countries around the world for sale in Canada. On December 1, Year 2023, DIL purchased 11,300 units of product from a foreign wholesaler for FC613,000 when the spot rate was FC1 = $0.754. The invoice called for payment to be made on April 1, Year 2024. On December 3, Year 2023, DIL entered into a forward contract with the Royal Bank at the 120-day forward rate of FC1 = $0.794. Hedge accounting is not applied.

DILs fiscal year-end is December 31. On this date, the spot rate was FC1 = $0.770 and the 90-day forward rate was FC1 = $0.799. The payment to the foreign supplier was made on April 1, Year 2024, when the spot rate was FC1 = $0.815.

Required:

Problem 1: Prepare DIL's entries to record:

  1. The purchase and the forward contract
  2. Adjustments required on December 31, year 2023 
  3. Entries on April 1, year 2024

Reference no: EM132672176

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