Ferb Company is a U.S.-based importer of fine fabrics. They periodically place orders with an Italian manufacturer for bolts of fabric at a price typically set in euros. Because they have business on an ongoing basis in euros, Ferb also enters into forward contracts to speculate on the Euro. On September 15, Ferb entered into a 45-day forward contract to purchase 2,000,000 euros. Ferb has a year-end of September 30. The forward contract cannot be settled net. Relevant exchange rates are shown below:
Required:
Prepare the journal entries to account for the forward contract for September and October.

Question

Ferb Company is a U.S.-based importer of fine fabrics. They periodically place orders with an Italian manufacturer for bolts of fabric at a price typically set in euros. Because they have business on an ongoing basis in euros, Ferb also enters into forward contracts to speculate on the Euro. On September 15, Ferb entered into a 45-day forward contract to purchase 2,000,000 euros. Ferb has a year-end of September 30. The forward contract cannot be settled net. Relevant exchange rates are shown below:
  Required:
Prepare the journal entries to account for the forward contract for September and October.

Quizplus · Accepted Answer

The Answer of Ferb Company is a U.S.-based importer of fine fabrics. They periodically place orders with an Italian manufacturer for bolts of fabric at a price typically set in euros. Because they have business on an ongoing basis in euros, Ferb also enters into forward contracts to speculate on the Euro. On September 15, Ferb entered into a 45-day forward contract to purchase 2,000,000 euros. Ferb has a year-end of September 30. The forward contract cannot be settled net. Relevant exchange rates are shown below:
  Required:
Prepare the journal entries to account for the forward contract for September and October.

Ferb Company Is a U