On December 10, 2017, Daisy Foods, a U.S. company, anticipates sales in the amount of A($25,000,000) to
Question:
On December 10, 2017, Daisy Foods, a U.S. company, anticipates sales in the amount of A\($25,000,000\) to an Australian customer, payment in Australian dollars to be received at the end of May 2018. On December 10, 2017, Daisy Foods enters a forward contract for the sale of A\($25,000,000\) for a total price of \($22,097,500\) on May 31,2018. The forward contract qualifies as a hedge of the forecasted sale. On March 1, 2018, Daisy delivered the merchandise to the Australian customer. On May 31, 2018, Daisy received A\($25,000,000\) from the customer, and delivered it to the broker to close the forward contract. Daisy Foods’ accounting year ends January 31. Relevant exchange rates (\($/A$)\) are as follows:
Required
Prepare the journal entries to record the above events, including January 31, 2018 adjusting entries.
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