Show all the journal entries to record

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Reference no: EM133328219

Question: Equitable Diversity International Inc. (EDI) buys and sells artwork from all over the world. On September 1, Year 5, EDI agreed to purchase some paintings from a seller in Mexico at a price of 800,000 Mexican pesos (MXN) when the spot rate was MXN1 = $0.068. EDI took delivery of the paintings on December 1, Year 5 when the spot rate was MXN1 = $0.079. The invoice required EDI to make payment by April 1, Year 6. The fiscal year-end of EDI is December 31, and on this date, the spot rate was MXN1 = $0.077. EDI made the payment on April 1, Year 6, when the spot rate was MXN 1 = $0.065. Required: (c) Worried that the Canadian dollar may depreciate relative to the MXN, on December 3, Year 5, EDI decided to buy a forward contract from the Royal Bank at the 120-day forward rate of MXN1 = $0.081 when the spot rate was still MXN1 = $0.079. On December 31, Year 5, the forward rate with maturity on April 1, Year 6 was MXN1 = $0.080. No hedge accounting is applied. (i) Show all the journal entries to record both the purchase and the forward contracts for

Reference no: EM133328219

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