Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello

Exercise 26

Fox Games is a U.S. company that manufacturers computer game consoles. Many of the components for the consoles are purchased abroad, and the finished product is sold in foreign countries as well as in the United States. Among the recent transactions of Fox are the following:
Instructions
a. Prepare in general journal form the entries necessary to record the preceding transactions.
b. Prepare the adjusted entries needed at December 31 for the SF80,000 account payable to Swiss Plastics and the NOK40,000,000 account receivable from Sounds. Year-end exchange rates, $0.68 per Swiss franc and $0.18 per Norwegian krone. (Use a separate journal entry to adjust each account balance.)
c. Compute (to the nearest dollar) the unit sales price of consoles in U.S. dollars in both the November 15 and the December 11 sales transaction. (The sales price may not be the same in each transaction.)
d. Compute the exchange rate for the yen, stated in U.S. dollars, on November 24.
e. Explain how Fox Games could have hedged its position to reduce the risk of loss from exchange rate fluctuations on ( 1 ) its foreign payables and ( 2 ) its foreign receivables.