On December 1,2016,Dorn Corporation agreed to purchase a machine to be manufactured by a company in Brazil.The purchase price is 1,150,000 Brazilian reals.To hedge against fluctuations in the exchange rate,Dorn entered into a forward contract on December 1 to buy 1,150,000 reals on April 1,the agreed date of machine delivery,for $0.375 per real.The following exchange rates were quoted:
Required:
Prepare journal entries necessary for Dorn during 2016 and 2017 to account for the transactions described above.

Question

On December 1,2016,Dorn Corporation agreed to purchase a machine to be manufactured by a company in Brazil.The purchase price is 1,150,000 Brazilian reals.To hedge against fluctuations in the exchange rate,Dorn entered into a forward contract on December 1 to buy 1,150,000 reals on April 1,the agreed date of machine delivery,for $0.375 per real.The following exchange rates were quoted:
  Required:
Prepare journal entries necessary for Dorn during 2016 and 2017 to account for the transactions described above.

Quizplus · Accepted Answer

The Answer of On December 1,2016,Dorn Corporation agreed to purchase a machine to be manufactured by a company in Brazil.The purchase price is 1,150,000 Brazilian reals.To hedge against fluctuations in the exchange rate,Dorn entered into a forward contract on December 1 to buy 1,150,000 reals on April 1,the agreed date of machine delivery,for $0.375 per real.The following exchange rates were quoted:
  Required:
Prepare journal entries necessary for Dorn during 2016 and 2017 to account for the transactions described above.

On December 1,2016,Dorn Corporation Agreed to Purchase a Machine to Be