Bulldog Enterprise, a U.S. firm, agreed on February 1, 20X1, to buy gears from a Mexican firm for 75,000 pesos. Delivery is scheduled for May 1, 20X1, with payment due at that time. On February 1, 20X1, Bulldog also acquired a forward contract to buy 75,000 pesos on May 1, 20X1. (The gears represent inventory to the U.S. firm.) Bulldog's year end is March 31.
Required:
Prepare the journal entries necessary for Bulldog Enterprise to record this activity. Assume that the following exchange rates existed:
Discount rate
15%

Question

Bulldog Enterprise, a U.S. firm, agreed on February 1, 20X1, to buy gears from a Mexican firm for 75,000 pesos. Delivery is scheduled for May 1, 20X1, with payment due at that time. On February 1, 20X1, Bulldog also acquired a forward contract to buy 75,000 pesos on May 1, 20X1. (The gears represent inventory to the U.S. firm.) Bulldog's year end is March 31.
Required:
Prepare the journal entries necessary for Bulldog Enterprise to record this activity. Assume that the following exchange rates existed:  
Discount rate  
15%

Quizplus · Accepted Answer

The Answer of Bulldog Enterprise, a U.S. firm, agreed on February 1, 20X1, to buy gears from a Mexican firm for 75,000 pesos. Delivery is scheduled for May 1, 20X1, with payment due at that time. On February 1, 20X1, Bulldog also acquired a forward contract to buy 75,000 pesos on May 1, 20X1. (The gears represent inventory to the U.S. firm.) Bulldog's year end is March 31.
Required:
Prepare the journal entries necessary for Bulldog Enterprise to record this activity. Assume that the following exchange rates existed:  
Discount rate  
15%