Taste Bits Inc. purchased chocolates from Switzerland for 200,000 Swiss francs (SFr) on December 1, 20X8. Payment is due on January 30, 20X9. On December 1, 20X8, the company also entered into a 60-day forward contract to purchase 100,000 Swiss francs. The forward contract is not designated as a hedge. The rates were as follows: Based on the preceding information, the entries on January 30, 20X9, include a:
A) Debit to Dollars Payable to Exchange Broker, $184,000.
B) Credit to Foreign Currency Transaction Gain, $4,000.
C) Credit to Foreign Currency Receivable from Exchange Broker, $180,000.
D) Debit to Foreign Currency Units (SFr), $184,000.

Question

Taste Bits Inc. purchased chocolates from Switzerland for 200,000 Swiss francs (SFr) on December 1, 20X8. Payment is due on January 30, 20X9. On December 1, 20X8, the company also entered into a 60-day forward contract to purchase 100,000 Swiss francs. The forward contract is not designated as a hedge. The rates were as follows:  Based on the preceding information, the entries on January 30, 20X9, include a:
A) Debit to Dollars Payable to Exchange Broker, $184,000. 
B) Credit to Foreign Currency Transaction Gain, $4,000. 
C) Credit to Foreign Currency Receivable from Exchange Broker, $180,000. 
D) Debit to Foreign Currency Units (SFr), $184,000.

Quizplus · Accepted Answer

The Answer of Taste Bits Inc. purchased chocolates from Switzerland for 200,000 Swiss francs (SFr) on December 1, 20X8. Payment is due on January 30, 20X9. On December 1, 20X8, the company also entered into a 60-day forward contract to purchase 100,000 Swiss francs. The forward contract is not designated as a hedge. The rates were as follows:  Based on the preceding information, the entries on January 30, 20X9, include a:
A) Debit to Dollars Payable to Exchange Broker, $184,000. 
B) Credit to Foreign Currency Transaction Gain, $4,000. 
C) Credit to Foreign Currency Receivable from Exchange Broker, $180,000. 
D) Debit to Foreign Currency Units (SFr), $184,000.