Warratah Ltd is an Australian company with international operations. Warratah has a hedge comprising:

• a three-month forward exchange contract by Warratah to purchase FC$280 000 from Dollars Bank as the hedging instrument; and

• a highly probable forecast purchase of inventory denominated in Foreign Currency dollars (FC$280 000) as the hedged item.

The forward exchange contract is entered into on 1 March 2020, and the forecast purchase of inventory is recognised on 1 April 2020. The inventory purchase is due to be settled on 1 June 2020. The following exchange rates are available

2020Spot rateForward rate

1 MarchA$1=FC$1.50A$1=FC$1.60

1 AprilA$1=FC$1.45A$1=FC$1.50

1JuneA$1=FC1.40A$1=FC1.40

Warratah Ltd has designated the hedging arrangement as a cash flow hedge, which qualifies for hedge accounting in accordance with AASB 9 'Financial instruments'. It is 100% effective.

The end of the reporting period for Warratah Ltd is 30 June, and the company complies with the requirements of AASB 9 'Financial instruments'.

REQUIRED:

Prepare the general journal entries to record these transactions in Warratah Ltd's books. (Show ALL working and provide any explanations necessary to support your answer). Round answers to the nearest Australian dollar.