Foreign currency transactions and hedging foreign

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CPA
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Foreign Currency Transactions and Hedging Foreign Exchange Risk 433 EXCEL CASE-DETERMINE FOREIGN EXCHANGE GAINS AND LOSSES
Import/Export Company, a U.S. company, made a number of import purchases and export sales denom- inated in foreign currency in 2008. Information related to these transactions is summarized in the fol- lowing table. The company made each purchase or sale on the date in the Transaction Date column and made payment in foreign currency or received payment on the date in the Settlement Date column.
Foreign Currency
Brazilian real (BRL) Swiss franc (CHF) Swiss franc (CHF) Euro
Euro
South African rand (ZAR) Chinese yuan (CNY) South Korean won (KRW)
Type of Transaction
Import purchase Export sale Import purchase Export sale Export sale Export sale Import purchase Import purchase
Required
Amount in Foreign Currency
(89,000) 56,700 (50,600) 32,250 32,250
402,000 (360,000) (47,300,000)
Transaction Date
1/1/2008 1/1/2008 4/1/2008 4/1/2008 4/1/2008 4/1/2008 2/1/2008 2/1/2008
Settlement Date
5/1/2008
4/1/2008 10/1/2008 7/1/2008 9/1/2008 8/1/2008 8/1/2008 8/1/2008
1. Create an electronic spreadsheet with the information from the preceding table. Label columns as follows:
Foreign Currency
Type of Transaction
Amount in Foreign Currency Transaction Date
Exchange Rate at Transaction Date $ Value at Transaction Date Settlement Date
Exchange Rate at Settlement Date $ Value at Settlement Date
Foreign Exchange Gain (Loss)
2. Use historical exchange rate information available on the Internet at www.x-rates.com, Historic Lookup, to find the 2008 exchange rates between the U.S. dollar and each foreign currency on the relevant transaction and settlement dates.
3. Complete the electronic spreadsheet to determine the foreign exchange gain (loss) on each transac- tion. Determine the total net foreign exchange gain (loss) reported in Import/Export Company's 2008 income statement.

Reference no: EM13306893

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