6.

B [$100,000 x (52 – 50)] = 200,000 loss (increase in payable)

17. (10% pay fixed - 8% receive variable) x 500,000 = 10,000 payment

19. (12% receive variable - 10% pay fixed) x 500,000 = 10,000 receipt
“Cougar pays Aggie’s fixed interest” (10% x 500,000) = 50,000
“Aggie pays Cougar’s variable interest” (12% x 500,000) = 60,000

Net settlement = Cougar receives the difference of 10,000

21. Dollar equivalent – 11/1/2019 435,000 Dollar

equivalent – 12/31/2019 (47,850,000 / 120) 398,750 Fair value
of forward contract receivable 36,250

22. Journal entry on December 31, 2019

Forward contract receivable 1,500,000
Unrealized gain - forward contract (5,000 x P300) 1,500,000
The forward contract receivable is the derivative asset. The amount is not
discounted anymore because it is to be received on January 31,2020.
Journal entries on January 31,2020
Tree inventory (5,000 x P800) 4,000,000
Cash 4,000,000

Cash 1,500,000
Forward contract receivable 1,500,00
0
Unrealized gain - forward 1,500,000
1,500,00
contract Gain on forward 0
contract

23.
Journal entry on December 31, 2019
Unrealized loss - forward contract 500,000
Forward contract payable (100,000 x P5) 500,000
The forward contract payable is the derivative liability. Because of the
reduction in the market price on February 1, 2020, Carmona Company shall
make a forward contract payment to the financial institution.
Journal entries on February 1,2020
Purchases 7,500,000
Cash (100,000 x P75) 7,500,000

Forward contract payable 500,000

Cash 500,000
 Loss on forward contract 500,000
Unrealized loss - forward contract 500,000

24.

Excess of market price over underlying price on 12/31 /2019(60 - 50)

10 Forward contract
receivable - 12/31/2019 (50,000 x 10) 500,000
25.

Excess of market price over underlying price on 3/1/2020(58 - 50) 8

Forward contract receivable - 3/1/2020 (50,000 x 8) 400,000

26. The notional figure is 8,000 kilos and the notional value is 8,000kilos times the underlying
fixed price of PI,200 per kilo or P9,600,000.

27.
Market price - December 31, 2019 1,500
Underlying fixed price 1,200
Derivative asset 300
Forward contract receivable (8,000 x 300) 2,400,000
Present value of derivative asset (2,400,000 x .91) 2,184,000
The present value of P2,184,000 is recognized as forward contract receivable on
December 31, 2019 because the amount is collectible on January 1,2021, one
year from December 31, 2019.
Journal entry on December 31,2019
Forward contract receivable 2,184,000
Unrealized gain - forward contract 2,184,000
28.

Journal entries on December

31,2020 Unrealized loss - 1,600,000 1,600,000
forward contract
Forward contract payable

Unrealized gain - forward 2,184,000

contract 2,184,000
Forward contract receivable
30.
P 24.15
Date of transaction: October 1,2019 selling
spot rate
Date of settlement: October 31, 2019 24.22
selling spot rate Foreign exchange loss per P .07
Swiss franc 100,000
Multiplied by: Number of Swiss P 7,000
 francs Foreign exchange loss

31.

In this problem, intercompany transactions between home office and branch are not given, then
alternatively it would be best to determine the nature of the account "home office". Home office account is
an intercompany account used to reflect transactions between home office and branch, it takes the place
of the capital account (alternatively it may be treated as a liability) of a branch.
Since, it is tike a capital account, therefore, to determine the amount, simply analyzethe basic accounting
equation. Assets equals Liabilities plus Capital. Thus, to apply:

Branch A
Branch B
Assets: P21,000 P19,000
Inventory, January 1 2,000 1,500

Imprest Branch Fund 55,000 43,500

Accounts Receivable, January 1 P78,000 P64,000
Total Assets Less: Liabilities 0 0
Home Office Current Account P 78,000 P 64,000