Taste Bits Inc. purchased chocolates from Switzerland for 200,000 Swiss francs (SFr) on December 1, 20X8. Payment is due on January 30, 20X9. On December 1, 20X8, the company also entered into a 60-day forward contract to purchase 100,000 Swiss francs. The forward contract is not designated as a hedge. The rates were as follows: Based on the preceding information, the entries on January 30, 20X9, include a:
A) Credit to Foreign Currency Units (SFr), $184,000.
B) Credit to Cash, $180,000.
C) Debit to Foreign Currency Transaction Loss, $4,000.
D) Debit to Dollars Payable to Exchange Broker, $184,000.

Question

Taste Bits Inc. purchased chocolates from Switzerland for 200,000 Swiss francs (SFr) on December 1, 20X8. Payment is due on January 30, 20X9. On December 1, 20X8, the company also entered into a 60-day forward contract to purchase 100,000 Swiss francs. The forward contract is not designated as a hedge. The rates were as follows:  Based on the preceding information, the entries on January 30, 20X9, include a:
A) Credit to Foreign Currency Units (SFr), $184,000. 
B) Credit to Cash, $180,000. 
C) Debit to Foreign Currency Transaction Loss, $4,000. 
D) Debit to Dollars Payable to Exchange Broker, $184,000.

Quizplus · Accepted Answer

The Answer of Taste Bits Inc. purchased chocolates from Switzerland for 200,000 Swiss francs (SFr) on December 1, 20X8. Payment is due on January 30, 20X9. On December 1, 20X8, the company also entered into a 60-day forward contract to purchase 100,000 Swiss francs. The forward contract is not designated as a hedge. The rates were as follows:  Based on the preceding information, the entries on January 30, 20X9, include a:
A) Credit to Foreign Currency Units (SFr), $184,000. 
B) Credit to Cash, $180,000. 
C) Debit to Foreign Currency Transaction Loss, $4,000. 
D) Debit to Dollars Payable to Exchange Broker, $184,000.