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