On December 1, 20X1, Micro World, Inc., entered into a 120-day forward contract to purchase 100,000 marks (DM). Micro World's fiscal year ends on December 31. The direct exchange rates were as follows:

\section*{Required}
Prepare all journal entries for Micro World Inc. for the following independent situations:

a. The forward contract was to hedge the purchase of furniture for 100,000 marks on December 1 . 20X1, with payment due on March 31, 20X2.

b. The forward contract was to hedge the agreement made on December 1, 20X1, to purchase furniture on January 30, with payment due on March 31, 20X2.

c. The forward contract was for speculative purposes only.
Requirement \(d\) uses the material in Appendix 11A.

d. Assume interest is significant and the time value of money is considered in valuing the forward contract. Use a 12 percent annual interest rate. Prepare all journal entries required if, as in case

a. the forward contract was to hedge the foreign currency denominated payable from the purchase of furniture for 100,000 marks on December 1, 20X1, with payment due on March 31, \(20 \times 2\).

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Date December 1, 20X1 December 31. 20X1 January 30, 20X2 March 31, 20X2 Spot Rate $.600 .610 .608 .602 Forward Rate for March 31, 20X2 $.609 .612 .605