Financial accounting 16th Edition by Jan Williams,Susan Haka,Mark Bettner ,Joseph Carcello

تمرين 61

Gains and Losses Journalizing Exchange Rate
Global Motors is a U.S.orporation that purchases automobiles from European manufacturers for distribution in the United States. recent purchase involved the following events:
Nov.2 Purchased automobiles from Stockholm Motors in Swedish kronor for Sk20,000,000, payable in 60 days.urrent exchange rate, $0.1286 per krona.Global uses the per­petual inventory system.)
Dec.1 Made year-end adjusting entry relating to the Sk20,000,000 account payable to Stock­holm Motors.urrent exchange rate, $0.1288 per krona.
Jan.1 Issued a check to World Bank for $2,566,800 in full payment of the account payable to Stockholm Motors.
Instructions
a.Prepare in general journal form the entries necessary to record the preceding events.
b.Compute the exchange rate (price) of the krona in U.S.ollars on January 11.
c.Explain a hedging technique that Global might have used to protect itself from the possibility of losses resulting from a significant increase in the exchange rate for the krona.