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Spot Rates US$1 = CDN$1.365 US$1 = CDN$1.3450 US$1 = CDNS1.3250 CDNS1.36 US$1 = CDN$1.368. Forward Rates November 1, 2019 (Transaction date) December 1, 2019 (Hedged date) December 31, 2019 (Year-end) March 1, 2020 (Settlement date) CDNS1.34 US$1 = CDN$1,368. *for contracts expiring on March 1, 2020 Assuming that the accounts receivable balance was not adjusted on December 1, 2019, what adjustment (if any) would be required to RXN's year-end accounts receivable balance? Select one: O A. A CDN$3,000 increase. O B. A CDN$3,000 decrease. OC. A CDN$1,500 decrease. O D. No adjustment is required. RXN's year-end is on December 31. On November 1, 2019 when the U.S. dollar was worth CDNS1.365, RXN sold merchandise to an American client for US$300,000. Full payment of this invoice was expected by March 1, 2020. On December 1, the spot rate was CDNS1.3450 and the three-month forward rate was CDNS1.3250. In order to minimize its Foreign Exchange risk and exposure, RXN entered into a forward contract with its bank on December 1, 2019 to deliver US$300,000 in three months' time. The spot rate at year-end was CDNS1.36 and the forward rate from December 31, 2019 to March 1, 2020 was CDN$1.34. On March 1, 2020, RXN received the USS300,000 from its client and settled its contract with the bank. The forward contract was to be accounted for as a fair value hedge of the US dollar receivable. Significant dates and exchange rates pertaining to this transaction are as follows: Spot Rates Forward Rates November 1, 2019 (Transaction date) US$1 = CDN$1.365 December 1, 2019 (Hedged date) December 31, 2019 (Year-end) US$1 TCDN$1.3450 US$1 = CDN$1.3250 CDN$1.36 %3! CDN$1.34 March 1, 2020 (Settlement date) US$1 = CDN$1.368. US$1 = CDN$1.368. %3D

Spot Rates US$1 = CDN$1.365 US$1 = CDN$1.3450 US$1 = CDNS1.3250 CDNS1.36 US$1 = CDN$1.368. Forward Rates November 1, 2019 (Transaction date) December 1, 2019 (Hedged date) December 31, 2019 (Year-end) March 1, 2020 (Settlement date) CDNS1.34 US$1 = CDN$1,368. *for contracts expiring on March 1, 2020 Assuming that the accounts receivable balance was not adjusted on December 1, 2019, what adjustment (if any) would be required to RXN's year-end accounts receivable balance? Select one: O A. A CDN$3,000 increase. O B. A CDN$3,000 decrease. OC. A CDN$1,500 decrease. O D. No adjustment is required. RXN's year-end is on December 31. On November 1, 2019 when the U.S. dollar was worth CDNS1.365, RXN sold merchandise to an American client for US$300,000. Full payment of this invoice was expected by March 1, 2020. On December 1, the spot rate was CDNS1.3450 and the three-month forward rate was CDNS1.3250. In order to minimize its Foreign Exchange risk and exposure, RXN entered into a forward contract with its bank on December 1, 2019 to deliver US$300,000 in three months' time. The spot rate at year-end was CDNS1.36 and the forward rate from December 31, 2019 to March 1, 2020 was CDN$1.34. On March 1, 2020, RXN received the USS300,000 from its client and settled its contract with the bank. The forward contract was to be accounted for as a fair value hedge of the US dollar receivable. Significant dates and exchange rates pertaining to this transaction are as follows: Spot Rates Forward Rates November 1, 2019 (Transaction date) US$1 = CDN$1.365 December 1, 2019 (Hedged date) December 31, 2019 (Year-end) US$1 TCDN$1.3450 US$1 = CDN$1.3250 CDN$1.36 %3! CDN$1.34 March 1, 2020 (Settlement date) US$1 = CDN$1.368. US$1 = CDN$1.368. %3D

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Spot Rates US$1 = CDN$1.365 US$1 = CDN$1.3450 US$1 = CDNS1.3250 CDNS1.36 US$1 = CDN$1.368. Forward Rates November 1, 2019 (Transaction date) December 1, 2019 (Hedged date) December 31, 2019 (Year-end) March 1, 2020 (Settlement date) CDNS1.34 US$1 = CDN$1,368. *for contracts expiring on March 1, 2020 Assuming that the accounts receivable balance was not adjusted on December 1, 2019, what adjustment (if any) would be required to RXN's year-end accounts receivable balance? Select one: O A. A CDN$3,000 increase. O B. A CDN$3,000 decrease. OC. A CDN$1,500 decrease. O D. No adjustment is required.
Transcribed Image Text:Spot Rates US$1 = CDN$1.365 US$1 = CDN$1.3450 US$1 = CDNS1.3250 CDNS1.36 US$1 = CDN$1.368. Forward Rates November 1, 2019 (Transaction date) December 1, 2019 (Hedged date) December 31, 2019 (Year-end) March 1, 2020 (Settlement date) CDNS1.34 US$1 = CDN$1,368. *for contracts expiring on March 1, 2020 Assuming that the accounts receivable balance was not adjusted on December 1, 2019, what adjustment (if any) would be required to RXN's year-end accounts receivable balance? Select one: O A. A CDN$3,000 increase. O B. A CDN$3,000 decrease. OC. A CDN$1,500 decrease. O D. No adjustment is required.
RXN's year-end is on December 31. On November 1, 2019 when the U.S. dollar was worth CDNS1.365, RXN sold merchandise to an American client for US$300,000. Full payment of this invoice was expected by March 1, 2020. On December 1, the spot rate was CDNS1.3450 and the three-month forward rate was CDNS1.3250. In order to minimize its Foreign Exchange risk and exposure, RXN entered into a forward contract with its bank on December 1, 2019 to deliver US$300,000 in three months' time. The spot rate at year-end was CDNS1.36 and the forward rate from December 31, 2019 to March 1, 2020 was CDN$1.34. On March 1, 2020, RXN received the USS300,000 from its client and settled its contract with the bank. The forward contract was to be accounted for as a fair value hedge of the US dollar receivable. Significant dates and exchange rates pertaining to this transaction are as follows: Spot Rates Forward Rates November 1, 2019 (Transaction date) US$1 = CDN$1.365 December 1, 2019 (Hedged date) December 31, 2019 (Year-end) US$1 TCDN$1.3450 US$1 = CDN$1.3250 CDN$1.36 %3! CDN$1.34 March 1, 2020 (Settlement date) US$1 = CDN$1.368. US$1 = CDN$1.368. %3D
Transcribed Image Text:RXN's year-end is on December 31. On November 1, 2019 when the U.S. dollar was worth CDNS1.365, RXN sold merchandise to an American client for US$300,000. Full payment of this invoice was expected by March 1, 2020. On December 1, the spot rate was CDNS1.3450 and the three-month forward rate was CDNS1.3250. In order to minimize its Foreign Exchange risk and exposure, RXN entered into a forward contract with its bank on December 1, 2019 to deliver US$300,000 in three months' time. The spot rate at year-end was CDNS1.36 and the forward rate from December 31, 2019 to March 1, 2020 was CDN$1.34. On March 1, 2020, RXN received the USS300,000 from its client and settled its contract with the bank. The forward contract was to be accounted for as a fair value hedge of the US dollar receivable. Significant dates and exchange rates pertaining to this transaction are as follows: Spot Rates Forward Rates November 1, 2019 (Transaction date) US$1 = CDN$1.365 December 1, 2019 (Hedged date) December 31, 2019 (Year-end) US$1 TCDN$1.3450 US$1 = CDN$1.3250 CDN$1.36 %3! CDN$1.34 March 1, 2020 (Settlement date) US$1 = CDN$1.368. US$1 = CDN$1.368. %3D
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