Jerber Electronics Inc. sold electrical equipment to a Netherlands company for 50,000 guilders (G) on May 14, with collection due in 60 days. On the same day, Jerber Electronics entered into a 60 -day forward contract to sell 50,000 guilders at a forward rate of G \(1=\$ .541\). Jerber Electronics' fiscal year ends on June 30. On June 30, the forward rate for an exchange on July 13 is \(\mathrm{G} 1=\$ .530\). The spot rates were:

\section*{Required}

a. Prepare journal entries for Jerber Electronics Inc. to record: (1) the sale of equipment, (2) the forward contract, (3) the adjusting entries on June 30, (4) the July 13 collection of the receivable, and (5) the July settlement of the forward contract.

b. What was the effect on the income statement in the fiscal year ending June 30 ?

c. What was the overall effect on the income statement from this transaction?
\(d\). What would have been the overall effect on income if the transaction were left unhedged?

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May 14 June 30 July 13 GI=$530 Gia 534 GI= 525