On November 1,2014,Portsmith Corporation,a calendar-year U.S.corporation,invested in a purely speculative contract to purchase 1 million yen on January 30,2015,from the Karoke Trading Company,a Japanese brokerage firm.Portsmith agreed to purchase 1,000,000 yen from Karoke at a fixed price of $0.0100 per yen.Karoke agreed to transmit 1,000,000 yen to Portsmith on January 30.Net settlement is not permitted.The spot rates for yen are:
The 30-day forward rate for yen on December 31,2014 was $0.0104.
Required:
Prepare the General Journal entries that Portsmith would record on November 1,December 31,and January 30.

Question

On November 1,2014,Portsmith Corporation,a calendar-year U.S.corporation,invested in a purely speculative contract to purchase 1 million yen on January 30,2015,from the Karoke Trading Company,a Japanese brokerage firm.Portsmith agreed to purchase 1,000,000 yen from Karoke at a fixed price of $0.0100 per yen.Karoke agreed to transmit 1,000,000 yen to Portsmith on January 30.Net settlement is not permitted.The spot rates for yen are:  
The 30-day forward rate for yen on December 31,2014 was $0.0104.
Required:
Prepare the General Journal entries that Portsmith would record on November 1,December 31,and January 30.

Quizplus · Accepted Answer

The Answer of On November 1,2014,Portsmith Corporation,a calendar-year U.S.corporation,invested in a purely speculative contract to purchase 1 million yen on January 30,2015,from the Karoke Trading Company,a Japanese brokerage firm.Portsmith agreed to purchase 1,000,000 yen from Karoke at a fixed price of $0.0100 per yen.Karoke agreed to transmit 1,000,000 yen to Portsmith on January 30.Net settlement is not permitted.The spot rates for yen are:  
The 30-day forward rate for yen on December 31,2014 was $0.0104.
Required:
Prepare the General Journal entries that Portsmith would record on November 1,December 31,and January 30.

On November 1,2014,Portsmith Corporation,a Calendar-Year U