UNIT V – ACCOUNTING FOR DERIVATIVES AND
HEDGING TRANSACTIONS
SPECULATION – to buy currency
Problem 1: (adapted)
On November 1, 2020, Belly Corporation entered into forward exchange contracts to purchase a US$ 20,000 in
90 days for delivery on February 1, 2021. The fiscal year end for Belly Corporation is December 31. The
exchange rates available on various dates are as follows:
Spot rate
30 day forward rate
60 day forward rate
90 days forward rate
Nov. 1, 2020
P 40.00
40.10
40.15
40.20
Dec. 31, 2020
P 40.25
40.35
40.40
40.45
REQUIRED: Prepare journal entries
2020
Nov. 1
FC Receivable ( 20,000 x 40.20)
Peso Payable
To record contract to buy US$ 20,000 at 40.20
forward exchange rate for 90 days
Dec. 31
2021
Feb. 1
Feb. 1, 2021
P 40.40
40.50
40.70
40.65
804,000
804,000
FC receivable
Forex gain
To recognized forex gain for the increase in
forward rate ( 40.35 – 40.20= 0.15 x 20,000)
3,000
3,000
Cash ( FC) ( $20,000 x 40.40)
Forex Gain ( 40.40 – 40.35 = .05 x 20,0000)
FC Receivable
To record receipt of foreign currency and
recognize forex gain on increase in exchange rate
( 4.40 – 4.35 = .05 x 20,000)
808,000
Peso Payable
Cash
To record payment to exchange dealer.
804,000
1,000
807,000
804,000
OR
2020
Dec. 31
2021
Feb. 1
•
Forward contract
Gain on forward contract
Increase in forward rate ( 4.35 – 4.20 = 0.15 x 20,000)
Cash – foreign currency
Cash – local currency
Forward contract
Gain on forward contract
To record receipt of foreign currency in exchange
for cash payment to exchange dealer.
Statement of Financial Position Presentation on December 31, 2020:
FC Receivable
807,000
Less: Peso Payable
804,000
Forward contract ( fair value – asset )
3,000
3.,000
3,000
808,000
804,000
3,000
1,000
Problem 2:
On December 1, 2020, PBC Corporation entered into forward exchange contracts for speculative purposes in
anticipation for a gain to sell US$ 10,000 in 90 days for delivery on March 1, 2021. The fiscal year end for PBC
Corporation is December 31. The exchange rates available on various dates are as follows:
Spot rate
30 day forward rate
60 day forward rate
90 days forward rate
120 days forward rate
Nov. 1, 2020
P 40.00
40.10
40.15
40.25
40.30
Dec. 31, 2020
P 40.25
40.35
40.40
40.45
40.50
Feb. 1, 2021
P 40.35
40.50
40.70
40.65
40.70
Q1: How much is the forex gain or (loss) on December 31, 2020? ______________
Q2: How much is forex gain or (loss) on March 1, 2021? ________________
Q3: How much is the peso receivable balance as of March 1, 2021? _____________
Q4: How much is the foreign currency payable as of March 1, 2021? ____ _____
Q5: How much is the net forex gain or loss? _________________
Q6: prepare journal entries for 2020 and 2021:
2020
Dec. 31
Peso Receivable ( 10,000 x 40.25)
FC Payable
to sell US$ 10,000 on March 1, 2021
Dec. 31
2021
March. 1
402,500
402,500
Forex loss
FC Payable
Increase in forex ( 4.40 – 4.25 = 0.15 x 10,000)
1,500
FC Payable
Forex Gain
decrease in forex ( 4.40 – 4.35 = .05 x 10,000)
500
1,500
500
Cash
Peso receivable
Settlement
402,500
FC payable
Cash (FC)
Delivery of foreign currency
403,500
402,500
403,500
Problem 3:
On December 1, 2020, MM Corporation entered into a 120-day forward contract to purchase 250,000 US dollars
for speculative purposes. MM Corporation fiscal year ends on December 31. The exchange rates as follows:
Spot rate
Forward rate ( 3/31/2021)
December 1, 2020
P 45.00
P 45.50
December 31, 2020
46.00
46.50
January 30, 2021
45.60
45.30
March 31, 2021
45.10
Q1. How much is the forex gain or loss to be reported from this forward contract in 2020?
a)
P 225,000
b) P 250,000
c) P 300,000
d) P 350,000
Q2.
How much is the forex gain or loss to be reported from this forward contract in 2021?
a) P 225,000
b) P 250,000
c) P 300,000
d) P 350,000
Hedging Instruments = Forward Contract
Problem 4:
The following data applies to VES Company’s purchase of 45,500 Belguim francs under a forward contract dated
November 1, 2020, for delivery on January 31, 2021:
Nov. 1, 2020
P 55.75
P 51.30
P 57.65
P 54.25
Spot rates
30-day forward rate
60-day forward rate
90-day forward rate
Dec. 31, 2020
P 53.90
P 56.15
P 52.30
P 55.45
Jan. 31, 2021
P 54.50
P 53.20
P 55.75
P 52.10
VES entered into the forward contract to speculate in the foreign currency.
REQUIRED: 1. Journal entries
2. The amount of gain or loss that should be reported in the income statement for the
year ended December 31, 2020 from this forward contract
Solution:
2020
Nov. 1
Dec. 31
2021
Jan. 31
FC Receivable
Peso payable
(45,500 x 54.25)
2,468,375
2,468,375
FC Receivable
Forex gain
#
86,450
86,450
Cash
Loss on FC
FC Receivable
#
2,479,750
75,075
FC payable
Cash
2,468,375
2,554,825
2,468,375
Problem 5;
WIND Corp. entered into a forward contract to hedge a sale of inventory in October 26, 2020 to be collected on
January 24, 2021, 72,000 FC in 90 days. The relevant exchange rates are as follows:
Spot rate
P 52.73
52.82
52.94
October 26, 2020
December 31, 2020
January 24, 2021
Forward rate ( Jan. 1, 2021)
P 52.77
52.89
What is the net forex gain (loss) from this transaction and hedge that will be reported on Wind Corp.’s
2020 statement of Income?
a) (P 2,160)
b) P 6,480
c) (P 8,640)
d) P 15,120
Problem 6:
On August 3, 2020 DTD Company entered into a noncancellable purchase agreement with a RRR Company ,
foreign company, involving a custom-made machine. DTD took delivery of the machine on December 1, 2020
( 120 days later). The purchase price was 100,000 foreign currency units (FCUs), which DTD remitted to the RRR
Company on January 30, 2021. Direct exchange rates on the respective dates are as follows:
Aug. 3, 2020
P 1.60
P 1.60
Spot rate
Forward rate
Dec. 1, 2020
P 1.64
P 1.64
Dec. 31, 2020
P 1.67
P 1.67
Jan. 30, 2021
P 1.70
P 1.70
Also on August 3, 2020, DTD entered into a 180-day forward contract to buy 100,000 FCUs.
Q1. What should be the capitalized cost of machinery?
a) P 160,000
b) P 164,000
c) P 167,000
d) P 170,000
Q2. What is the foreign exchange gain or loss recognized in earnings for 2016 on the foreign currency
commitment.
a) P 0
b) P 4,000 gain
c) P 4,000 loss
d) P 7,000 gain
Problem 7 :
CS Company sold for 111,200 euros to a customer in France on November 2, 2020. Collection in
euros was due on January 31, 2021. On the same date, to hedge this foreign currency exposure, CS
company enters into a forward contract to sell 111,200 euros to Metro Bank for delivery on January
31, 2021.
Exchange rates for euros on different dates are as follows:
Nov. 2, 2020
Dec. 31, 2020
Spot rates
81.9
80.7
30-day forward rate
82.3
80.4
60-day forward rate
81.8
80.3
90-day forward rate
80.6
81.6
120-day forward rate
80.1
81.4
REQUIRED:
1. Journal entries
Solution:
2020
Nov. 1
Account Receivable
Sales ( 81.9 x 111,2000)
To record sale.
1
Dec.
31
31
2021
Jan. 31
Jan. 31, 2021
80.1
83.9
82.6
83.4
82.8
9,107,280
9,107,280
Forward Contract Receivable (80.60 x 111,200)
Forward Contract payable (fc)
Forward contract to sell euros to Metro Bank.
8,962,720
Forex loss ( 80.7 - 81.9 = 1.2 x 111,200)
Accounts Receivable
To adjust accounts receivable to year-end spot rate
133,440
Forward Contract payable (fc)
Forex gain (80.6 – 80.4 = 0.2 x 111,200)
To record the decrease in forward rate.
Foreign Currency (80.1 x 111,200)
Forex loss
Accounts Receivable (9,107,280-133,440)
Receipt of foreign currency from customer
8,962,720
133,440
22,240
22,240
8,907,120
66,720
8,973,840
31
31
Forward Contract payable (8,962,720 – 22,24)
Forex gain
Foreign currency (80.1 x 111,200)
To record delivery of foreign currency to Metro Bank
8,940,480
Cash
Forward Contract Receivable (FC)
To record settlement with Metro Bank
8,962,720
33,360
8,907,120
8,962,720
2. What amount will affect profit or loss regarding the hedge item on the financial statement date in 2020?
3. What amount will affect profit or loss regarding the hedging instrument the financial statement date in
2021?
4. As a result of all foregoing transactions, what amount will affect current earnings on the settlement
date in 2021?
Note: if memo entry may be made to record the forward contract, the journal entries relating to Forward
Contract would be:
2020
Nov. 1
Memo Entry
The company entered into a forward contract with
Metro Bank to sell euros on January 31, 2021
Dec. 31
2021
Jan. 31
Forward Contract
Forex gain (80.6 – 80.4 = 0.2 x 111,200)
To record the decrease in forward rate.
Cash
Forward contract
Forex gain (80.4 – 80.1 = 0.3 x 111,200)
Foreign currency (80.1 x 111,200)
To record settlement with Metro Bank
22,240
22,240
8,962,720
22,240
33,360
8,907,120
Problem 8:
On December 1, 2020, Strike Company entered into a firm commitment to acquire a machinery from Brazil
Company. Delivery and passage of title would be on March 31, 2021 at the price of 37,800 euros. On the same
date, to hedge against unfavorable changes in the exchange rate, Strike entered into a 120-day forward contract
with BDO to buy 37,800 euros.
Exchange rates were as follows:
December 1, 2020
December 31, 2020
March 31, 2021
REQUIRED:
1. Journal Entries if accounted for as:
a) fair value hedge
b) cash flow hedge
Spot rate
P 96.50
P 97.25
P 99.70
Forward rate
P 94.30
P 96.50
P 99.70
Solution:
2020
Dec. 1
31
2021
Mar 31
. 31
FAIR VALUE
HEDGE
Hedge item
Hedge Instru4,54ment
202
Dec. 1
No entry
Loss firm Commitment
83,160
Firm commitment
To recognize the change in fair value
of firm commitment (96.50-94.30)
Loss on firm commit.
120,960
Firm commitment
To recognize the change in fair value
of firm commitment (99.70 - 96.50)
Machinery
Firm Commitment
Cash (FC)
To record receipt of
Machinery
31
83,160
Mar 31
120,960
Memo Entry
Forward contract
83,160
Gain on FC
To recognize the change in fair value
of firm commitment
Cash (FC)
Forward contract
Gain on FC
Cash (local currency)
To record settlement
With BDO.
83,160
3,768,660
83,160
120,960
3,564,540
3,564,540
204,120
3,768,660
OR
FAIR VALUE
HEDGE
Hedge item
2020
Dec. 1
31
2021
Mar 31
Hedge Instrument
2020
Dec. 1
No entry
Loss firm Commitment
Firm commitment
#
83,160
Loss on firm commit.
Firm commitment
#
Merchandise Inventory
Firm Commitment
Cash (C)
#
120,960
31
83,160
2021
Mar 31
120,960
3,564,540
204,120
. 31
3,768,660
FC Receivable
FC payable
FC Receivable
Gain on FC
#
FC payable (/fc)
Cash(local currency)
#
Cash (Foreign currency)
FC Receivable
Gain on FC
#
3,564,540
3,564,540
83,160
83,160
3,563,540
3,564,540
3,768,660
3,647,700
120,960
b) cash flow hedge
Hedge item
2020
Dec. 1
31
2021
Mar 31
. 31
Hedge Instru4,54ment
202
Dec. 1
No entry
Loss firm Commitment
83,160
Firm commitment
To recognize the change in fair value
of firm commitment (96.50-94.30)
Loss on firm commit.
120,960
Firm commitment
To recognize the change in fair value
of firm commitment (99.70 - 96.50)
Machinery
3,564,540
Firm Commitment
204,120
Cash (FC)
To record receipt of Machinery
31
83,160
Mar 31
120,960
3,768,660
Memo Entry
Forward contract
83,160
Gain on FC
To recognize the change in fair value
of firm commitment
Cash (FC)
Forward contract
Gain on FC
Cash (local currency)
To record settlement
With BDO.
83,160
3,768,660
83,160
120,960
3,564,540
OR
Hedge item
2020
Dec. 1
31
2021
Mar 31
Hedge Instrument
2020
Dec. 1
No entry
No entry
31
Merchandise Inventory
Cash (FC)
To record purchases
2021
Mar 31
3,768,660
3,768,660
. 31
FC Receivable
FC payable
3,564,540
FC Receivable
OCI -FC
#
83,160
3,564,540
83,160
FC payable (/fc)
Cash(local currency)
#
Cash (Foreign currency)
FC Receivable
OCI -FC
#
3,563,540
3,564,540
3,768,660
3,647,700
120,960
OPTION CONTRACTS
Call option – Hedge an exposed liability
Problem 9: (adapted)
On December 1, 2020, Hope Company paid P 3,000 to purchase a 90-day call option for 500,000 Thailand baht.
The option purpose is to protect an exposed liability off 500,000 baht relating to a purchase of merchandise
received on December 17, 2020 and to be paid on March 1, 2021.
Relevant rates and market values at different dates are as follows:
Dec.1, 2020
P 1.20
1.20
P 3,000
Spot rate (Market price )
Strike price (exercise price)
Fair value of call option
Dec. 31, 2020
P 1.28
1.20
P 42,000
March 1, 2021
P 1.27
1.20
P 35,000
Q1: What is the Forex contract value – option as of December 31, 2020? _________________
Q2: What is the time value of option on December 11, 2020?
_________________
Q3: What is the intrinsic value of option on December 31, 2020? __________________
Q4: What is the time value of option on December 31, 2020?
____________________
Q5: What is the time value of option on March 1, 2021? ________________________
Q6. What is the intrinsic value of option on March 1, 2021? ______________________
Journal entries:
FAIR VALUE
2020
Dec 1
1
Dec 31
Inventory
Accounts Payable
#
Inv. In call option
Cash
#
Forex Loss
Accounts Payable
HEDGE
CASH FLOW HEDGE
2015
Oct. 1
600,000
600,000
3,000
1
3,000
40,000
Dec. 31
40,000
Inventory
Accounts Payable
#
Inv. In call option
Cash
#
Forex Loss
Accounts Payable
600,000
600,000
3,000
3,000
40,000
40,000
#
31
31
2021
Mar. 1
1
1
Inv. In call option
Gain on call option
#
39,000
Accounts Payable
Forex gain
Cash (FC)
#
Loss on call option
Inv. In call option
#
Cash (FC)
Cash (LC)
Inv. In call option
#
640,000
39,000
2021
Mar. 1
5,000
635,000
7,000
31
7,000
635,000
31
600,000
35,000
#
Inv. In call option
Loss on call option
OCI
#
39,000
1,000
40,000
Accounts Payable
Forex gain
Cash
#
OCI
Inv. In call option
#
FC
Cash
Inv. In call option
640,000
5,000
635,000
7,000
7,000
636,000
600,000
35,000
Problem 10.
On January 1, 2021, GF, Inc. paid P 16,000 cash to acquire a put foreign exchange option for 1,000,000
Thailand baht, with an expiration date of December 31, 2021. The option hedges 2021’s forecasted exporting
sales of 1,000,000 baht. GF’s fiscal year ends June 30.
Spot rate (market price)
Strike price (exercise price)
Fair value of put option at 6/30/2015
1/1/2021
P 1.20
1.20
6/30/2021
P 1.12
1.19
P 81,000
What is the intrinsic value and time value of option on January 1, 2015?
Intrinsic value
Time value
Intrinsic value
a)
P 16,000
P 0
c)
P 10,000
b)
0
16,000
d)
6,000
12/31/2021
P1.15
1.19
Time value
P 6,000
10,000
Problem 11:
On August 1, 2020, SSR, Inc. a Philippine Company purchased a machine costing FC200,000 from foreign
vendor to be paid on October 1, 2020. Also on August 1, 2020, SSR entered into a contract to purchase
FC200,000 to be delivered on October 1, 2020, at a forward rate of P 0.35 The exchange rate was as follows:
August 1, 2020
FC1 = P 0.34
August 31, 2020
= P 0.31
September 30, 2020
= P 0.33
October 1, 2020
FC1 = P 0. 32
November 30, 2020
0.32
December 31, 2020
0.33
Q1. Which of the following statements is incorrect concerning the accounting treatment of these transactions?
a) The machine final recorded value was P 70,000.
b) The beginning balance in the accounts payable was P 68,000
c) The exchange gain on the accounts payable of P 4,000 was recognized on October 1, 2020.
d) The peso value of the accounts payable just before payment on October 1, 2020 was P 64,000.
Q2. Which of the following statements is incorrect concerning the forward contract?
a) The balance of Foreign Currency Receivable on October 1, 2020 was P 70,000.
b) The peso equivalent of the foreign currency to be received on October 1, 2020 was P 64,000
c) The loss on forward contract to be recognized on October 1, 2020 amounted to P 6,000.
d) The amount paid for the forward contract on October 1, 2020 was P 64,000.
Problem 12:
On October 1, 2020, HR Philippines took delivery from Thailand firm of inventory costing 1,140,000 baht.
Payment is due on January 31, 2021. Concurrently, HR Philippines paid P 15,700 cash to acquire an at-themoney call option for 1,140,000 baht. Strike price is P 12.40.
Market price
Fair value of call option
Oct. 1, 2020
P 12.40
Dec. 31, 2020
P 12.423
P 28,200
Jan. 31, 2021
P 12.427
P 30,780
Which of the following statements is incorrect concerning the accounting treatment of these transactions?
a) The gain on hedging instrument of P 4,560 due to change in change in intrinsic value on Jan. 31,
2021.
b) The final value of the inventory was P 14,136,000.
c) The option to buy was “out of the money” on January 31, 2021.
d) The peso value of the foreign currency on January 31, 2021 was P 14,166,780
Problem 13.
CS Company sold for 111,200 euros to a customer in France on November 2, 2020. Collection in euros was due
on January 31, 2021. On the same date, to hedge this foreign currency exposure, CS company entered into a
futures contract to sell 111,200 euros to Metro Bank for delivery on January 31, 2021.
Exchange rates for euros on different dates are as follows:
Spot rates
30-day futures
60-day futures
90-day futures
120-day futures
Nov. 2, 2020
81.9
82.3
81.8
80.6
80.1
Dec. 31, 2020
80.7
80.4
80.3
81.6
81.4
Jan. 31, 2021
80.1
83.9
82.6
83.4
82.8
Which of the following statements is incorrect concerning the accounting treatment of these transactions?
a) A forex loss of P 133,440 on the hedge item was recorded on the financial statement date in 2020.
b) A net forex loss of P 33, 360 on the hedge item and the hedging instrument on Jan. 31, 2021.
c) The peso value of the foreign currency on January 31, 2021 was P 8,907,120.
d) The peso value of forward contract payable before payment on January 31, 2021 was P 8,962,720.
Problem 14.
On September 1, 2020, RRD Corp. entered into a foreign exchange contract for speculative purposes by
purchasing 50,000 deutsche marks for delivery in 60 days. The rates to exchange follow:
Spot rate
30-day forward rate
60-day forward rate
9/1/2015
P 21.00
20.98
20.99
9/30/2015
P 21.50
20.00
22.10
In its September , 2020 income statement, what should RRD report as foreign exchange transaction gain
(loss) ? __ _________
Problem 15:
On January 3, 2020, LCR Inc. paid P 9,800 to acquire a put option. This is in relation to the sale of merchandise
worth $ 65,000. (strike price = P 4.965).
Spot rate
Fair value of option
1/3/2020
P 4.934
P 9,800
3/31/2020
P 4.908
P 11,400
6/20/2020
P 4.750
P 13,975
How much is the foreign gain/loss on the intrinsic portion on March31, 2020? ______________
Proble16.
On November 1, 2020, WAY, Inc. paid P 45,000 to acquire call foreign currency option for HK$ 90,000. The
option is acquired to hedge the 2021 anticipated purchase of merchandise for HK$ 90,000. The option expires
on March 30, 2021.
Spot rate
Fair value of option
Strike price
11/1/2020
P 3.46
P 45,000
P 3.47
12/31/2020
P 3.40
P 50,500
P 3.47
3/31/2021
P 3.39
P 72,000
P 3.47
At what amount must the merchandise be presented as of December 31, 2020? _____ _____
Problem 17:
Troy intends to sell ¥550,000 under a forward contract dated December 1. Exchange rate were as follows:
Dates
Forward rates
Spot rates
December 1
P 0.55
P 0.53
December 31
P 0.50
P 0.49
March 22
P 0.48
P 0.46
At what amount must Forward Contract Receivable and Forward Contract Payable be presented on December
31?
FC Receivable: ______________________
FC Payable _______________________
Problem 18:
On October 31, 2015, PTR Philippines took delivery from British firm of inventory costing £1,450,000.
Payment is due on anuary 31, 2016. At the same time , PTR paid P 16,500 cash to acquire a 90-day call option
for £1,450,000.
Strike price
Spot rate
Forward rate
Fair value of option
October 31, 2015
P 12.60
P 12.61
P 12.72
?
December 31, 2015
P 12.60
P 12.62
P 12.77
P 34,000
January 31, 2016
P 12.60
P 12.64
P 12.78
?
Q1: The foreign exchange gain or loss on option contract due to change in time value on December 31, 2020
________
Q2. the foreign exchange gain or loss due to change in intrinsic value on January 31, 2021 : ___________
Problem 19:
On November 3, 2020, SS Company entered into a firm commitment to sell a machinery . Delivery and passage
of title would be on February 28, 2021 at the price of $15,750 Singapore dollars. On the same date, SS
Company entered into a 120-day forward contract with BDO to sell the $ 15,750 Singapore dollars. Exchange
rate were as follows:
Spot rate
P 46.25
P 47.40
P 49.50
November 3, 2020
December 31, 2020
February 28, 2021
Forward rate
P 44.30
P 46.70
P 49.50
How much is the foreign exchange gain or loss recognized by SS Company on the firm commitment on
December 31, 2020?
a) P 18,112.50 gain
b) P 18,112.50 loss
c) P 37,800 loss
d) P 37,800 gain
Problem 20.
On November 1, 2020 REAR took delivery from US firm of inventory costing US$100,000. Payment is due on
January 30, 2021. Concurrently REAR paid P 900 cash to acquire a 90-day call option for US$100,000.
Nov. 1, 2020
1.2
1.2
?
Spot rate
Strike price
FV of call option
Dec. 31, 2020
1.22
?
2,200
Jan. 30, 2021
1.23
?
?
What is the net forex gain (loss) to be recognized by REAR on December 31, 2015?
a) P 700 net loss
b) P 1,300 net gain
c) P 1,300 net loss
d) P 2,000 net gain
Problem 21:
On October 1, 2020, JYM Company ordered some equipment from a supplier for 200,000 baht. Delivery and
payment is to occur on November 30, 2020. The spot rates on October 1 and November 30 are P 1.50 and
P 1.30. The October 1, 2020 forward rate for November 30 settlement is P 1.35.
Q1. If the company does not hedge the commitment, at what amount is the equipment recorded on the books on
November 30, 2020? ___________________________.
Q2. If the company acquires on October 1, 2020 a forward contract to hedge any unfavorable changes in fair
value of the equipment, at what amount is the equipment recorded on the books on November 30, 2020?
_____________________________
Problem 22:
On October 1, 2020, CTC Company took delivery from a foreign firm of inventory costing 1,000,000 LCU.
Payment is due on January 30, 2021. Concurrently, CTC Company paid P 1,900 cash to acquire a 120-day call
option for 1,000,000 LCU.
Spot rate (market price)
Strike price (exercise price)
Fair value of call option
10/1/20
P 2.00
2.00
P1,900
12/31/20
P 2.30
2.00
P 4,200
1/30/21
P 2.40
2.00
P 5,000
REQUIRED: Prepare the necessary journal entries to record the above transactions on the books of SBC
Company.
Problem 23.
SBC Company sold merchandise for 315,000 pounds to a customer in London on November 1, 2020.
Collection in British pounds was due on January 30, 2021. On the same date , SBC entered into a 90-day
futures contract to sell 315,000 pounds to Metro Bank. Exchange rates for pound on different dates are as
follows:
Spot rate
30-day futures
60 day futures
90-day futures
November 1, 2020
P 51.3
P 52.2
P 51.7
P 50.5
December 31, 2020
P 52.6
P 52.4
P 52.1
P 52.5
January 30, 2021
P 51.8
P 53.1
P 52.5
P 53.3
REQUIRED: Prepare the necessary journal entries to record the above transactions on the books of SBC
Company.