Merit \& Family purchased engines from Germany for 30,000 marks on March 10, with payment due on June 8. Also, on March 10, Merit acquired a 90-day forward contract to purchase 30,000 marks at a forward rate of DM \(1=\$ .58\). The forward contract was acquired to hedge Merit \& Family's exposed net liability position in marks. The spot rates were:

\section*{Required}
Prepare journal entries for Merit \& Family to record the purchase of the engines, entries associated with the forward contract, and entries for the payment of the foreign currency payable.

Transcribed Image Text:

March 10 June 8 DM 1 = $.57 DMI .60