PART 2 A: ist 2017 Baker Company Mexico Company was to pay Baker Company on Marc
ID: 2581776 • Letter: P
Question
PART 2 A: ist 2017 Baker Company Mexico Company was to pay Baker Company on March 1st 2018. On December 31, 2017 the peso was worth 9 cents On March 1st 2018 the peso was worth 13 cents REQUIRED: MAKE ALL THE JOURNAL ENTRIES BAKER COMPANY MAKES IN CONNECTION WITH THIS SALE. PART 2B: USE THE INFORMATION FROM PART A On November 2nd, 2017 Baker entered into a forward contract to sell the 700,000 pesos to Big Bank at 11 cents each Baker's interest rate is 8% REQUIRED; MAKE ALL THE ENTRIES BAKER MAKES IN CONNECTION WITH THIS SALE AND THE FORWARD CONTRACTExplanation / Answer
Part A At the time of Sales Date Account Title Debit Credit 1 Pesos=.11$ 1-Nov-17 Baker 77,000 700000*.11=77,000 Sales 77,000 At the time year end Date Account Title Debit Credit 31-Dec-17 Foreign Exchenge Loss 14,000 700000*.09=63000 Baker 14,000 Loss=77000-63000 At the time of Receipt Date Account Title Debit Credit 1-Mar-18 Cash 91,000 700000*.13=91000 Foreign Exchange Gain 28,000 Gain=91000-63000=28000 Baker 63,000 Part B At the time of Sales Date Account Title Debit Credit 1 Pesos=.11$ 1-Nov-17 Baker 77,000 700000*.11=77,000 Sales 77,000 At the time of forward booking Date Account Title Debit Credit 2-Nov-17 Interest not due 2,053 Total Interest 4 month Cash 2,053 2 month 77000*2/12*8% 1,027 2 month 77000*2/12*8% 1,027 2,053 At the of year end Date Account Title Debit Credit 31-Dec-17 Interest 2,053 Total Interest 4 month Interest not due 2,053 2 month 77000*2/12*8% 1,027 2 month 77000*2/12*8% 1,027 2,053 At the time of Receipt Date Account Title Debit Credit 1-Mar-18 Cash 77,000 Foreign Exchange Gain 77,000 Baker - Booking the expenses of the interest Date Account Title Debit Credit 1-Mar-18 Interest 2,053 2 month 77000*2/12*8% 1,027 Interest not due 2,053
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