E 13-7 Firm purchase commitment, foreign currency hedge On November 2, 2016, Baz, a U.S. retailer, ordered merchandise from Mat of Japan. The merchandise is to be delivered to Baz on January 31, 2017, at a price of 1,000,000 yen. Also on November 2, Baz hedged the foreign currency commitment with Mat by contracting with its exchange broker to buy 1,000,000 yen for delivery on January 31, 2017.

Exchange rates for yen are:

11/2/16 12/31/16 1/31/17 Spot rate $0.0078 $0.0076 $0.0075 30-day forward rate $0.0079 $0.0078 $0.0076 90-day forward rate $0.0080 $0.0079 $0.0078 REQuIRED 1. Prepare the entry (or entries) on Baz’s books on November 2, 2016.