11 wild west incorporated a u s corporation sold inventory to a company in the phili 4307479

11 wild west incorporated a u s corporation sold inventory to a company in the phili 4307479

11) Wild West, Incorporated (a U.S. corporation) sold inventory to a company in the Philippines for 1,600,000 pesos on account on February 1, 2011, with payment expected in 90 days. Wild West entered into a forward contract to hedge this transaction, and properly accounts for the transaction as a cash flow hedge. Wild West has a March 31 fiscal year end, and uses an 8% discount rate, resulting in a 30-day present value factor of .9934. The forward contract is settled net. The relevant exchange rates are shown below:

Spot Rate

Forward Rate to

May 2, 2011

February 1, 2011

$0.0229 = 1 peso

$0.0270 = 1 peso

March 31, 2011

$0.0254 = 1 peso

$0.0268 = 1 peso

May 2, 2011

$0.0280 = 1 peso

$0.0280 = 1 peso

Required:

Record the journal entries needed by Wild West on February 1, March 31, and May 2. Round all entries to the nearest whole dollar.

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