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