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    Zorba Company A U S Based Importer of Specialty Olive Oil Placed

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    Let's Talk With Hassan
    Zorba Company, a U.S.-based importer of olive oil, placed an order with a foreign supplier for 500 cases of olive oil at a price of 100 crowns per case, totaling 50,000 crowns. The olive oil was received on December 1, Year 1 and payment was made on January 31, Year 2. Various journal entries are required to account for the purchase and hedging of foreign exchange risk.

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    Zorba Company A U S Based Importer of Specialty Olive Oil Placed

    Uploaded by

    Let's Talk With Hassan
    61 views1 page
    Zorba Company, a U.S.-based importer of olive oil, placed an order with a foreign supplier for 500 cases of olive oil at a price of 100 crowns per case, totaling 50,000 crowns. The olive oil was received on December 1, Year 1 and payment was made on January 31, Year 2. Various journal entries are required to account for the purchase and hedging of foreign exchange risk.

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    Zorba Company a u s Based Importer of Specialty Olive Oil Placed

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    Zorba Company, a U.S.-based importer of olive oil, placed an order with a foreign supplier for 500 cases of olive oil at a price of 100 crowns per case, totaling 50,000 crowns. The olive oil was received on December 1, Year 1 and payment was made on January 31, Year 2. Various journal entries are required to account for the purchase and hedging of foreign exchange risk.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    61 views1 page

    Zorba Company A U S Based Importer of Specialty Olive Oil Placed

    Uploaded by

    Let's Talk With Hassan
    Zorba Company, a U.S.-based importer of olive oil, placed an order with a foreign supplier for 500 cases of olive oil at a price of 100 crowns per case, totaling 50,000 crowns. The olive oil was received on December 1, Year 1 and payment was made on January 31, Year 2. Various journal entries are required to account for the purchase and hedging of foreign exchange risk.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    Zorba Company a U S based importer of specialty olive oil

    placed #3432
    Zorba Company, a U.S.-based importer of specialty olive oil, placed an order with a foreign
    supplier for 500 cases of olive oil at a price of 100 crowns per case. The total purchase price is
    50,000 crowns. Relevant exchange rates are as follows:Zorba Company has an incremental
    borrowing rate of 12 percent (1 percent per month) and closes the books and prepares financial
    statements on December 31.Required1. Assume the olive oil was received on December 1,
    Year 1, and payment was made on January 31, Year 2. There was no attempt to hedge the
    exposure to foreign exchange risk. Prepare journal entries to account for this import purchase.2.
    Assume the olive oil was received on December 1, Year 1, and payment was made on January
    31, Year 2. On December 1, Zorba Company entered into a two-month forward contract to
    purchase 50,000 crowns. The forward contract is properly designated as a fair value hedge of a
    foreign currency payable. Prepare journal entries to account for the import purchase and foreign
    currency forward contract.3. The olive oil was ordered on December 1, Year 1. It was received
    and paid for on January 31, Year 2. On December 1, Zorba Company entered into a two-month
    forward contract to purchase 50,000 crowns. The forward contract is properly designated as a
    fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is
    measured through reference to changes in the forward rate. Prepare journal entries to account
    for the foreign currency forward contract, firm commitment, and import purchase.4. The olive oil
    was received on December 1, Year 1, and payment was made on January 31, Year 2. On
    December 1, Zorba Company purchased a two-month call option for 50,000 crowns. The option
    was properly designated as a cash flow hedge of a foreign currency payable. Prepare journal
    entries to account for the import purchase and foreign currency option.5. The olive oil was
    ordered on December 1, Year 1. It was received and paid for on January 31, Year 2. On
    December 1, Zorba Company purchased a two-month call option for 50,000 crowns. The option
    was properly designated as a fair value hedge of a foreign currency firm commitment. The fair
    value of the firm commitment is measured through reference to changes in the spot rate.
    Prepare journal entries to account for the foreign currency option, firm commitment, and import
    purchase.View Solution:
    Zorba Company a U S based importer of specialty olive oil placed

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