On January 1, 2015, Jessica Marie Company sold equipment to Gwang Ju Company for 20,000,000 Korean won,

Question:

On January 1, 2015, Jessica Marie Company sold equipment to Gwang Ju Company for 20,000,000 Korean won, with payment to be received in two years on January 1, 2017. The exchange rate on January 1, 2015, is 800 won = $1. On the same date, Jessica Marie enters into a futures contract and agrees to sell 20,000,000 won on January 1, 2017, at the rate of 800 won = $1.

On December 31, 2015, the exchange rate is 790 won = $1. On December 31, 2016, the exchange rate is 830 won = $1. The appropriate discount rate throughout this period is 10%.

Instructions:

Make all journal entries necessary on Jessica Marie's books in 2015, 2016, and 2017 to record this sale, the futures contract, and the collection of the receivable. For purposes of estimating future settlement payments under the futures contract, assume that the current exchange rate is the best forecast of the future exchange rate.

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal... Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...