On 11/1/06, Purox entered into a 90-day FX forward to hedge a noncancellable inventory purchase order it issued that day that will require payment of 1,000,000 euros in 90 days to a French vendor. Direct exchange rates for the euro are as follows:
Required:
a. Prepare all journal entries relating to the FX forward over the contract's life.
b. Prepare the journal entry to record the purchase of the inventory.

Question

On 11/1/06, Purox entered into a 90-day FX forward to hedge a noncancellable inventory purchase order it issued that day that will require payment of 1,000,000 euros in 90 days to a French vendor. Direct exchange rates for the euro are as follows:
  Required:
a. Prepare all journal entries relating to the FX forward over the contract's life.
b. Prepare the journal entry to record the purchase of the inventory.

Quizplus · Accepted Answer

The Answer of On 11/1/06, Purox entered into a 90-day FX forward to hedge a noncancellable inventory purchase order it issued that day that will require payment of 1,000,000 euros in 90 days to a French vendor. Direct exchange rates for the euro are as follows:
  Required:
a. Prepare all journal entries relating to the FX forward over the contract's life.
b. Prepare the journal entry to record the purchase of the inventory.

On 11/1/06, Purox Entered into a 90-Day FX Forward to Hedge