On November 18, 2006, when the selling spot rate for a foreign country's local currency unit (LCU) was LCU1 = $0.18, Usc Company acquired a 30-day forward contract for LCU100,000 at the forward rate of LCU1 = $0.21. The contract was not designated as a hedge. On November 30, 2006, the end of the accounting period, the 12-day forward rate for the LCU was LCU1 = $0.22. On December 18, 2006, when Usc paid the forward contract and received the LCUs, the selling spot rate was LCU1 = $0.23. The appropriate discount rate is 6%.
Prepare journal entries (omit explanations) for Usc Company on November 17 and 30 and December 17, 2006.

Question

Quizplus · Accepted Answer

The Answer of On November 18, 2006, when the selling spot rate for a foreign country's local currency unit (LCU) was LCU1 = $0.18, Usc Company acquired a 30-day forward contract for LCU100,000 at the forward rate of LCU1 = $0.21. The contract was not designated as a hedge. On November 30, 2006, the end of the accounting period, the 12-day forward rate for the LCU was LCU1 = $0.22. On December 18, 2006, when Usc paid the forward contract and received the LCUs, the selling spot rate was LCU1 = $0.23. The appropriate discount rate is 6%.
Prepare journal entries (omit explanations) for Usc Company on November 17 and 30 and December 17, 2006.

On November 18, 2006, When the Selling Spot Rate for a Foreign