On November 1,2011,Ross Corporation,a calendar-year U.S.corporation,invested in a purely speculative contract to purchase 1 million euros on January 30,2012,from Trattoria Company,an Italian brokerage firm.Ross agreed to purchase 1,000,000 euros from Trattoria at a fixed price of $1.420 per euro.Trattoria agreed to transmit 1,000,000 euros to Ross on January 30,2012.Net settlement is not permitted.The spot rates for euros are:
The 30-day futures rate for euros on December 31,2011 was $1.405.
Required:
Prepare the General Journal entries that Ross would record on November 1,December 31,and January 30.

Question

On November 1,2011,Ross Corporation,a calendar-year U.S.corporation,invested in a purely speculative contract to purchase 1 million euros on January 30,2012,from Trattoria Company,an Italian brokerage firm.Ross agreed to purchase 1,000,000 euros from Trattoria at a fixed price of $1.420 per euro.Trattoria agreed to transmit 1,000,000 euros to Ross on January 30,2012.Net settlement is not permitted.The spot rates for euros are:
  The 30-day futures rate for euros on December 31,2011 was $1.405.
Required:
Prepare the General Journal entries that Ross would record on November 1,December 31,and January 30.

Quizplus · Accepted Answer

The Answer of On November 1,2011,Ross Corporation,a calendar-year U.S.corporation,invested in a purely speculative contract to purchase 1 million euros on January 30,2012,from Trattoria Company,an Italian brokerage firm.Ross agreed to purchase 1,000,000 euros from Trattoria at a fixed price of $1.420 per euro.Trattoria agreed to transmit 1,000,000 euros to Ross on January 30,2012.Net settlement is not permitted.The spot rates for euros are:
  The 30-day futures rate for euros on December 31,2011 was $1.405.
Required:
Prepare the General Journal entries that Ross would record on November 1,December 31,and January 30.

On November 1,2011,Ross Corporation,a Calendar-Year U