A U.S. company purchases a 90-day certificate of deposit from a German bank on September 15, when the spot rate is $1.231/€. The certificate has a face value of €1,000,000 and pays interest at an annual rate of 2 percent. On December 14, the certificate of deposit matures, and the company receives principal and interest due to it, in euros. The company records interest revenue at that time. The spot rate on December 14 is $1.243/€. The average spot rate for the period September 15 - December 14 is $1.265/€. The company's accounting year ends December 31.
Required
Prepare all necessary journal entries to record the above events on the U.S. company's books.

Question

Quizplus · Accepted Answer

The Answer of A U.S. company purchases a 90-day certificate of deposit from a German bank on September 15, when the spot rate is $1.231/€. The certificate has a face value of €1,000,000 and pays interest at an annual rate of 2 percent. On December 14, the certificate of deposit matures, and the company receives principal and interest due to it, in euros. The company records interest revenue at that time. The spot rate on December 14 is $1.243/€. The average spot rate for the period September 15 - December 14 is $1.265/€. The company's accounting year ends December 31.
Required
Prepare all necessary journal entries to record the above events on the U.S. company's books.

A US Company Purchases a 90-Day Certificate of Deposit from a a German