Need Accounting help with rex corporation
Rex Corporation, a U.S. firm with a calendar accounting year, agreed to buy a specially made truck from a Japanese firm for delivery on February 28, 2017 with payment due on that date. On the same date the agreement was signed, November 1, 2016, a forward contract due on February 28, 2017, was also signed to purchase 1,000,000 yen, the contract price of the truck. Exchange rates were as follows:
|
Date |
Spot Rate |
Forward Rate |
|
11/1/16 |
$0.0076 |
$0.0078 |
|
12/31/16 |
$0.0081 |
$0.0080 |
|
2/28/17 |
$0.0085 |
$0.0085 |
Discount rate = 8%
Required:
Prepare the journal entries needed to properly reflect the purchase and forward contract through the end of the fiscal year.
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