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Prepare the necessary journal entries in books of wild mines

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Reference no: EM133011531

Wild Mines Ltd exports iron ore to China. On 1 March 2021, Wild Mines enters into a binding contract to export iron ore to New Star China Ltd. The contract price is US $3 million. Worried about exchange rate fluctuations, Wild Mines enters into a forward-rate contract with My Bank Ltd but for $2 million. New Star receives the shipment on 17th May 2021 and made the payment on 17th July 2021. Wild Mines' reporting year ends on 30 June 2021.

Additional information:

Date                         Spot rate                    Forward rate
1 March 2021 US   $0.72 US                    $0.75
17 May 2021 US    $0.74 US                   $0.76
30 June 2021 US   $0.71 US                     $0.72
17 July 2021 US    $0.73 US                     $0.73

Required:

Problem 1: Prepare the necessary journal entries in the books of Wild Mines Ltd.

Reference no: EM133011531

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