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Posted: October 29th, 2022

Dupage ACC 2205 Myway Company sold equipment to a Canadian company

Question 35 5. Myway Company sold equipment to a Canadian company for 100,000 Canadian dollars (C$) on January 1, 2009 with settlement to be in 60 days. On the same date, Alman entered into a 60-day forward contract to sell 100,000 Canadian dollars at a forward rate of 1 C$ = $.94 in order to manage its exposed foreign currency receivable. The forward contract is not designated as a hedge. The spot rates were: January 1 1C$= $0.945, March 1 1C$= $0.930. The entry to revalue foreign currency payable to current U.S. dollar value on March 1 will have:A. a credit to Foreign Currency Transaction Gain for $1,500.B. a debit to Foreign Currency Transaction Loss for $2,500.C. a debit to Foreign Currency Transaction Loss for $1,500.D. a credit to Foreign Currency Transaction Gain for $1,000.

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