Prepare journal entries to account for the import purchase

Reference no: EM133360379

Question: Pacifico Company, a U.S.-based importer of beer and wine, purchased 2,000 cases of Oktoberfest-style beer from a German supplier for 600,000 euros. Relevant U.S. dollar exchange rates for the euro are as follows:

Date Spot Rate Foward Rate to Oct 15 Call Option Premium for Oct 15 (strike price 1.50)

Aug 15 $1.50 $1.56 $ 0.05

Sept 30 $1.55 $1.59 $ 0.06

Oct 15 $1.58 $1.58 (spot) N/A

b. Assume that the beer arrived on August 15, and the company made payment on October 15. On August 15, the company entered into a two-month forward contract to purchase 600,000 euros. The company designated the forward contract as a cash flow hedge of a foreign currency payable. Forward points are excluded in assessing hedge effectiveness and amortized to net income using a straight-line method on a monthly basis. Prepare journal entries to account for the import purchase and foreign currency forward contract.

Reference no: EM133360379

Questions Cloud

What are two priority nursing diagnoses for this child : What are two priority nursing diagnoses for this child? What are the priority nursing interventions for this patient after being transferred from the ICU?

Are ifrs more principles-based than us gaap : What is the difference between principles-based and rules-based accounting ? (B) Are IFRS more principles-based than U.S. GAAP? Explain.

What was the typical nurse-to-patient ratio : What was the typical nurse-to-patient ratio? What was the typical staff mix on the unit? Did the unit use LPN/LVN, CNAs/UAPs, or CMAs?

How could a jamaican patient that has celiac disease : how could a Jamaican patient that has celiac disease, hypertension, and obesity modify their diet based on the specific foods they eat to manage their condition

Prepare journal entries to account for the import purchase : straight-line method on a monthly basis. Prepare journal entries to account for the import purchase and foreign currency forward contract

What diagnostic tests will you perform : A 75-year-old male presents at your clinic accompanied by his daughter. He states he is going to the bathroom "a lot" and doesn't like it. His daughter states

What is the journal entry to record the alfonsos assets : ACCT 435 Gardner-Webb University What is the journal entry to record the Alfonso's assets acquired and the liabilities assumed in the BelAire merger on January

Discuss how the national eating disorder association mission : Discuss how the National Eating Disorder Association mission, vision, and values statements relate to key public health concepts.name and discuss

How would you summarize the public health workforce : How would you summarize the public health workforce at state and local levels? What do you notice about the professions, such as who they are, their training

User Account

All Pages