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Case study on journal

Case study on journal

On November 1, 2013, Athom Corporation purchased 5,000 television sets for its merchandise inventory from Sockk, a South Korean firm, at a total quoted cost of 600,000,000 won (W). On this date, the spot rate for the won was $1 = 1,080W. On the same day, Athom invested $500,000 cash in a non-interest bearing account with a Japanese bank, to hedge its exposed liability position. The account payable to Sockk is due on January 30, 2014. The exchange rates on December 31, 2013 and January 30, 2014 were $1 = 1,060W, and $1 = 1,030W, respectively. Athom agreed to pay Sockk in won. The bank deposit made by Athom will be held in won but will be withdrawn in dollars by Athom on January 30th. Assume that Athom has a December 31 year-end. Assume this is a fair value hedge.
Prepare all the journal entries for Athom Corporation’s General Journal on November 1, 2013, December 31, 2013, and January 30, 2014. Round entries to the nearest whole dollar. If no entry is required on a particular date, indicate “no entry” in the General Journal.

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