Requirement 1

2019
Jun-17 Bank charges/OPEX

Jul-20 Equipment

Jul-31 Acceptance payable

Aug-12 Acceptance payable

FOREX loss

Net FOREX gain

Requirement 2
Aug-12 Acceptance payable

Net FOREX gain

Requirement 3
Jun-17 Bank charges/OPEX
Marginal deposit on LC

Aug-12 Acceptance payable

FOREX loss
uirement 1

Bank charges/OPEX 3,000.00

Cash 3,000.00
Charges to open letter of credit

Equipment 906,300.00 18,000.00

Acceptance payable 906,300.00
Receipt of goods

Acceptance payable 1,800.00 18,000.00

FOREX gain 1,800.00 18,000.00
Year end adjustment

Acceptance payable 904,500.00 18,000.00

FOREX loss 900.00 18,000.00
Cash 905,400.00
Payment of LC to PNB and recognition of FOREX loss

Net FOREX gain 900.00

uirement 2
Acceptance payable 904,500.00 18,000.00
FOREX gain 1,260.00 18,000.00
Cash 903,240.00 Note: AP/AR to deduct is based

Net FOREX gain 3,060.00

uirement 3
Bank charges/OPEX 3,000.00 18,000.00
Marginal deposit on LC 180,720.00
Cash 183,720.00

Acceptance payable 904,500.00 18,000.00

FOREX loss 900.00 18,000.00
Marginal deposit on LC 180,720.00
Cash 724,680.00
 50.35

50.25 904,500.00 new

50.35 906,300.00 old

50.30 905,400.00 new

50.25 904,500.00 old

50.18 903,240.00 new

50.25 904,500.00 old
Note: AP/AR to deduct is based on old.

50.20 903,600.00

50.30 905,400.00 new

50.25 904,500.00 old
Notes:

Transaction date
SFP date
Settlement date

Requirement 1
2019
Sep-18 Cash
Packing credit line
Availment of packing cre

Sep-29 Accounts receivable

Sales
Shipment of export merc

COGS
Inventory
Recording COGS, perpet

Sep-30 Accounts receivable

FOREX gain
Year end adjustment

Oct-18 Cash
FOREX loss
Accounts receivable
Settlement received from

Net FOREX loss

Requirement 2
Oct-18 Cash
FOREX gain
Accounts receivable

Net FOREX gain

Oct-18 Packing credit line

Cash
 Sep-29
Sep-30
Oct-18

125,000.00
Packing credit line 125,000.00
Availment of packing credit line

ounts receivable 289,520.00 8,000.00 36.19

289,520.00
Shipment of export merchandise

148,000.00
Inventory 148,000.00
Recording COGS, perpetual

ounts receivable 80.00 8,000.00 36.20

FOREX gain 80.00 8,000.00 36.19
Year end adjustment Note: Baliktad ang gain/loss dito since it is fro

288,960.00 8,000.00 36.12

640.00 8,000.00 36.20
Accounts receivable 289,600.00
Settlement received from BPI for the LC and recognition of FOREX loss

FOREX loss 560.00

290,000.00 8,000.00 36.25

FOREX gain 400.00 8,000.00 36.20
Accounts receivable 289,600.00 Note: Cash paid is based on new.

FOREX gain 480.00

king credit line 125,000.00

125,000.00
 289,600.00 new
289,520.00 old
tad ang gain/loss dito since it is from the perspective of the seller.

288,960.00 new
289,600.00 old

290,000.00 new
289,600.00 old
paid is based on new.
Notes:

Requirement 1
2019
Jul-20 Equipment

Jul-20 Accounts payable

Aug-19 Notes payable

Interest expense
FOREX loss

Requirement 2
Jul-31 Notes payable

Interest expense

Aug-19 Notes payable

Interest expense
Interest payable
FOREX loss

Net FOREX loss

 NO SFP DATE. This makes transactions much simpler.

uirement 1

Equipment 906,300.00 18,000.00

Accounts payable 906,300.00 Note: Used A/P instead of "a
Receipt of imported goods

Accounts payable 906,300.00 18,000.00

Notes payable 906,300.00 Note: Pwede ba itong idirets
Borrowing 18,000 to finance the purchase

Notes payable 906,300.00 18,000.00

Interest expense 13,608.00 18,000.00
FOREX loss 900.00 270.00
Cash 920,808.00
Payment of notes

uirement 2
Notes payable 1,260.00 18,000.00
FOREX gain 1,260.00 18,000.00
Year end adjustment

Interest expense 4,977.72 99.00

Interest payable 4,977.72
Year end adjustment

Notes payable 905,040.00 18,000.00

Interest expense 8,618.40 18,000.00
Interest payable 4,977.72 18,000.00
FOREX loss 2,171.88
Cash * 920,808.00 171.00
Payment of notes Note: Use the interest expen
*for one month from Jul 20 -
Net FOREX loss 911.88
 50.35
Note: Used A/P instead of "acceptance" because we did not avail of the LC.

50.35
Note: Pwede ba itong idiretso?

50.40 907,200.00 new

50.35 906,300.00 old
50.40 13,608.00 30/360

50.28 905,040.00 new

50.35 906,300.00 old

50.28 4,977.72 11/360

50.40 907,200.00 new

50.28 905,040.00 old
50.35 906,300.00 "should have been"

50.40 8,618.40 19/360

Note: Use the interest expense that "should have been"
*for one month from Jul 20 - Aug 19
Requirement 1
2019
Aug-31 Notes receivable

COGS

Sep-30 Notes receivable

Interest receivable

Nov-29 Cash
FOREX loss

Net FOREX loss

uirement 1

Notes receivable 36,200.00 1,000.00

Sales 36,200.00
Shipment of merchandise

COGS 15,000.00 18,000.00

Inventory 15,000.00 Note: Pwede ba itong idirets
To record COGS, perpetual

Notes receivable 50.00 1,000.00

FOREX gain 50.00 1,000.00
8.33
Interest receivable 302.08
Interest income 302.08
Year end adjustments

Cash * 37,023.00 1,000.00

FOREX loss 131.08 1,000.00
Interst income 602.00
Interest receivable 302.08 16.67
Notes receivable 36,250.00 25.00
*for three months from Aug

Net FOREX loss -36,250.00

 36.20

50.35
Note: Pwede ba itong idiretso?

36.25 36,250.00 new

36.20 36,200.00 old
36.25 302.08 30/360

36.12 36,120.00 new

36.25 36,250.00 old

36.12 602.00 60/360

36.25 906.25 60/360
*for three months from Aug 31 - Nov 29
PROBLEM 19-1

CASE 1
2017
Nov-02 Inventory 180,000.00
Accounts payable

Dec-31 Accounts payable 20,000.00

Forex gain

CASE 2
2017
Nov-28 Accounts receivable 36,000.00
Sales

Dec-31 Accounts receivable 2,000.00

Forex gain

CASE 3
2017
Dec-31 Inventory 24,000.00
Accounts payable

Forex loss 3,000.00

Accounts payable

CASE 4
2017
Dec-31 Accounts receivable 7,500.00
Sales

Forex loss 1,250.00

Accounts receivable
 40,000.00 4.50 A/R
180,000.00 CASE 1 NA
CASE 2 38,000.00
40,000.00 4.00 160,000.00 new CASE 3 NA
20,000.00 40,000.00 4.50 180,000.00 old CASE 4 6,250.00

20,000.00 1.80
36,000.00

20,000.00 1.90 38,000.00 new

2,000.00 20,000.00 1.80 36,000.00 old

60,000.00 0.40
24,000.00

60,000.00 0.45 27,000.00 new

3,000.00 60,000.00 0.40 24,000.00 old

2,500,000.00 0.003
7,500.00

2,500,000.00 0.0025 6,250.00 new

1,250.00 2,500,000.00 0.003 7,500.00 old
 A/P Forex Loss Forex Gain
160,000.00 NA 20,000.00
NA NA 2,000.00
27,000.00 3,000.00 NA
NA 1,250.00 NA
PROBLEM 19-2
Note: Assume periodic.

Requirement A

May-01 Purchases 800,000.00

Accounts payable 800,000.00

Jun-20 Accounts payable 800,000.00

Cash 800,000.00

Jul-01 Accounts receivable 500,000.00

Sales 500,000.00

Aug-10 Cash 500,000.00

Accounts receivable 500,000.00

Requirement B

May-01 Purchases 800,000.00

Accounts payable 800,000.00

Jun-20 Forex loss 100,000.00

Accounts payable 800,000.00
Cash 900,000.00

Jul-01 Accounts receivable 500,000.00

Sales 500,000.00

Aug-10 Cash 501,923.08

Forex gain 1,923.08
Accounts receivable 500,000.00
 800,000.00 0.40 2,000,000.00
2,000,000.00 0.40 800,000.00

2,000,000.00 0.45 900,000.00 new

2,000,000.00 0.40 800,000.00 old

500,000.00 5.20 96,153.85

96,153.85 5.20 500,000.00

96,153.85 5.22 501,923.08 new

96,153.85 5.20 500,000.00 old
PROBLEM 19-7

CONTRACT 1 - FOREIGN CURRENCY AT FCR LEG

2016
Oct-01 FCR 160,000.00
FCP 160,000.00
Buy 400k yen at forward rate of 0.40.

Dec-31 FCR 4,000.00

Forex gain 4,000.00
Note: A/R leg moves because you are buying the yen in this case.

2017
Mar-31 Cash 172,000.00
FCR 164,000.00
Forex gain 8,000.00
Receipt of 400k yen at the spot rate (equals forward rate).

FCP 160,000.00
Cash 160,000.00
Payment of forward contract.

CONTRACT 2 - FOREIGN CURRENCY AT FCP LEG

2016
Dec-01 FCR 9,200.00
FCP 9,200.00

Dec-31 FCP 200.00

Forex gain 200.00

2017
Mar-01 FCP 9,000.00
Forex loss 800.00
Cash 9,800.00

Cash 9,200.00
FCR 9,200.00
Note: If A/R leg, increase in forward rate is GAIN.
If A/P leg, increase in forward rate is LOSS.
PROBLEM 19-4

2017
Jun-01 Inventory 460,000.00
A/P 460,000.00
Settlement is in yen, yen is the foreign currency denomination.

FCR (FC) 480,000.00

FCP 480,000.00

Jun-30 Forex loss 20,000.00

A/P 20,000.00
It is a loss because you have to pay more peso in exchange for the purchase of the calculators.

FCR 20,000.00
Forex gain 20,000.00

Aug-01 A/P 480,000.00

Forex loss 30,000.00
Cash 510,000.00
Settlement of accounts with foreign supplier.

FCP 480,000.00
Cash 480,000.00

Cash 510,000.00
FCR 500,000.00
Forex gain 10,000.00
 PROBLEM 19-5

2017
Dec-01 A/R 1,280,000.00
Sales
Note: No COGS since assumption for this will be periodic.

FCR 1,240,000.00
FCP (FC)

Dec-31 Forex loss 10,000.00

A/R
hase of the calculators. Loss because you are going to receive less peso in exchange for the sale.

Forex loss 20,000.00

FCP
Loss because you are going to have to pay more peso to lend the amount.

Mar-01 Cash 1,290,000.00

A/R
Forex gain

Forex loss 30,000.00

FCP 1,260,000.00
Cash

Cash 1,240,000.00
FCR
 1,280,000.00

1,240,000.00

10,000.00
in exchange for the sale.

20,000.00
peso to lend the amount.

1,270,000.00
20,000.00

1,290,000.00

1,240,000.00
PROBLEM 19-3

2017
Nov-01 FCR (FC - MYR) 3,076,800.00
FCP (PHP) 3,076,800.00

Dec-31 Forex loss 4,800.00

FCR 4,800.00
Loss because you will be receiving less in peso.

Firm commitment for merchandise 4,800.00

Forex gain 4,800.00
Gain because you will be paying less for the purchase.

2018
Jan-30 Inventory 3,079,200.00
A/P (MYR) 3,079,200.00 use the spot rate on Jan 30

Inventory 4,800.00
Firm commitment for merchandise 4,800.00
Since items have been received, firm commitment should be closed.

No adjustments to the hedge at this point because there is no change in the forward rate.

Mar-01 Cash (MYR) 3,086,400.00

Forex gain 14,400.00
FCR (MYR) 3,072,000.00

FCP (PHP) 3,076,800.00

Cash 3,076,800.00

Forex loss 7,200.00

A/P (MYR) 3,079,200.00
Cash (MYR) 3,086,400.00

Net exposure - net gain 7,200.00

 PROBLEM 19-6

2016
Oct-02 FCR (PHP) 17,400.00
FCP (THB) 17,400.00

Dec-31 Forex loss 150.00

FCP 150.00

Firm commitment from sales 150.00

Forex gain 150.00

2017
Mar-31 Cash 17,700.00
Sales 17,700.00

FCP (THB) 17,550.00

use the spot rate on Jan 30 Forex gain 150.00
Cash 17,400.00

Cash 17,400.00
FCR 17,400.00

he forward rate. Firm commitment from sales 150.00

Forex gain 150.00

Sales 300.00
Firm commitment from sales 300.00
cash instead of A/R

take note of this, if you are SELLING, you give the cash at the transaction date rate
Recasted using split accounting.
Note: 90 days

2017
Nov-01 Investment in put option 4,000.00 Strike
Cash 4,000.00 Spot
Fair value of option purchased. IV

Dec-31 Investment in put option 9,000.00

OCI - TV 3,000.00 Strike
OCI - IV 12,000.00 Spot
IV
2018
Feb-01 Investment in put option 2,000.00
OCI - TV 1,000.00
OCI - IV 3,000.00 Strike
Spot
Cash 495,000.00 IV
Sales 495,000.00

Cash 15,000.00
Investment in put option 15,000.00
To close investment account.

OCI - IV 15,000.00
Sales 15,000.00

Sales 4,000.00
OCI - TV 4,000.00
5.10 FV 4,000.00
5.15 IV -
- TV 4,000.00

Inc/Dec Sales 515,000.00

5.10 FV 13,000.00 9,000.00 COGS 320,000.00 62%
4.98 IV 12,000.00 12,000.00 GP 195,000.00 38%
0.12 TV 1,000.00 - 3,000.00

Inc/Dec
5.10 FV 15,000.00 2,000.00
4.95 IV 15,000.00 3,000.00
0.15 TV 0.00 - 1,000.00

At inception 510,000.00 strike price at inception

Option cost - 4,000.00 premium paid for the option
Total sales 506,000.00
Recasted using split accounting.
Note: 150 days

2017
Jun-01 Investment in call option 9,000.00 Spot
Cash 9,000.00 Strike
Fair value of option purchased. IV

Jun-31 Investment in call option 4,500.00

OCI - TV 2,500.00 Spot
OCI - IV 2,000.00 Strike
IV
2018
Jul-31 Investment in call option 10,500.00
OCI - TV 7,500.00
OCI - IV 18,000.00 Spot
Strike
Sep-01 Investment in call option 2,000.00 IV
OCI - TV 4,000.00
OCI - IV 6,000.00
Spot
Cash 26,000.00 Strike
Investment in call option 26,000.00 IV

Inventory 576,000.00
Cash 576,000.00

OCI - IV 26,000.00
Inventory 26,000.00

Inventory 9,000.00
OCI - TV 9,000.00
5.50 FV 9,000.00
5.50 IV -
- TV 9,000.00

Inc/Dec Sales 515,000.00

5.52 FV 13,500.00 4,500.00 COGS 320,000.00 62%
5.50 IV 2,000.00 2,000.00 GP 195,000.00 38%
0.02 TV 11,500.00 2,500.00

Inc/Dec
5.70 FV 24,000.00 10,500.00
5.50 IV 20,000.00 18,000.00
0.20 TV 4,000.00 - 7,500.00

Inc/Dec
5.76 FV 26,000.00 2,000.00
5.50 IV 26,000.00 6,000.00
0.26 TV - - 4,000.00
*OCI - forward rate is only a balancing figure

Discounting of a forward contract.

With split accounting/cost of hedging

Jun-01 FCR - FC 542,000.00

FCP - PHP 542,000.00

Notional amount 100,000.00 Notional amount

Forward rate - 6/30 5.60 Spot rate - 6/30
560,000.00
Contracted amount 542,000.00 Contracted amount
18,000.00
Discount rate 0.990 Discount rate
FV of derivative 17,820.00 PV change of spot compo

Jun-30 FCR - FC 17,820.00

OCI - forward rate 3,960.00
OCI - spot rate 21,780.00

Notional amount 100,000.00 Notional amount

Forward rate - 7/31 5.72 Spot rate - 7/31
572,000.00
Contracted amount 542,000.00 Contracted amount
30,000.00
Discount rate 0.995 Discount rate
FV of derivative 29,850.00 FV of derivative

Jul-31 FCR - FC 12,030.00

OCI - forward rate 5,990.00
OCI - spot rate 18,020.00

Notional amount 100,000.00 Notional amount

Forward rate - 7/31 5.75 Spot rate - 7/31
575,000.00
Contracted amount 542,000.00 Contracted amount
33,000.00
Discount rate 1.000 Discount rate
FV of derivative 33,000.00 FV of derivative
Sep-01 FCR - FC 3,150.00
OCI - forward rate 2,050.00
OCI - spot rate 5,200.00

Inventory 575,000.00
Cash 575,000.00

OCI - spot rate 45,000.00

OCI - forward rate 12,000.00
Inventory 33,000.00

Cash - FC 575,000.00
FCR - FC 575,000.00

FCP - PHP 542,000.00

Cash - PHP 542,000.00
 Without split accounting/cost of hedging

Jun-01 FCR - FC
FCP - PHP

Notional amount 100,000.00

Spot rate - 6/30 5.52
552,000.00
Contracted amount 530,000.00
22,000.00
Discount rate 0.990
PV change of spot component 21,780.00

Jun-30 FCR - FC
Loss on forward contract
OCI - spot rate

Notional amount 100,000.00

Spot rate - 7/31 5.70
570,000.00
Contracted amount 530,000.00
40,000.00
Discount rate 0.995
FV of derivative 39,800.00

Jul-31 FCR - FC
Loss on forward contract
OCI - spot rate

Notional amount 100,000.00

Spot rate - 7/31 5.75
575,000.00
Contracted amount 530,000.00
45,000.00
Discount rate 1.000
FV of derivative 45,000.00
 Sep-01 FCR - FC
Loss on forward contract
OCI - spot rate

Inventory 575,000.00 Inventory

Basis adjustment - 33,000.00 Cash
Contract at inception 542,000.00
OCI - spot rate
Inventory

Cash - FC
FCR - FC

FCP - PHP
Cash - PHP
542,000.00
542,000.00

17,820.00
3,960.00
21,780.00

12,030.00
5,990.00
18,020.00
 3,150.00
2,050.00
5,200.00

575,000.00
575,000.00

45,000.00
45,000.00 basis adjustment if no cost of hedging;
mismatch in P&L
575,000.00
575,000.00

542,000.00
542,000.00