On November 1, 2011, Portsmith Corporation, a calendar-year U.S.corporation, invested in a purely speculative contract to purchase 1 million yen on January 30, 2012, 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, 2011 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, 2011, Portsmith Corporation, a calendar-year U.S.corporation, invested in a purely speculative contract to purchase 1 million yen on January 30, 2012, 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, 2011 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, 2011, Portsmith Corporation, a calendar-year U.S.corporation, invested in a purely speculative contract to purchase 1 million yen on January 30, 2012, 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, 2011 was $0.0104.
Required:
Prepare the General Journal entries that Portsmith would record on November 1, December 31, and January 30.

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