1.

Brandlin Company of Anaheim, California, sells parts to a foreign customer on December 1, 2017, with payment of 23,000 korunas to be received on March 1, 2018. Brandlin enters into a forward contract on December 1, 2017, to sell 23,000 korunas on March 1, 2018. Relevant exchange rates for the koruna on various dates are as follows:

Date	Spot Rate	Forward Rate (to March 1, 2018)
December 1,2017	$4.10	$4.175
December 31, 2017	4.20	4.300
March 1, 2018	4.35	N/A

Brandlins incremental borrowing rate is 9 percent. The present value factor for two months at an annual interest rate of 9 percent (0.75 percent per month) is 0.9852. Brandlin must close its books and prepare financial statements at December 31.

A a-1. Assuming that Brandlin designates the forward contract as a cash flow hedge of a foreign currency receivable and recognizes any premium or discount using the straight-line method, prepare journal entries for these transactions in U.S. dollars.

A1

Need Help is solving solution as follow:

No	Date	General Journal	Debit	Credit
1	12/01/2017	Accounts receivable (K)	?
		Sales		?

A2

a-2. What is the impact on 2017 net income?

a-3. What is the impact on 2018 net income?

a-4. What is the impact on net income over the two accounting periods? (Do not round intermediate calculations.

Req A2 - A4

Need Help is solving solution as follow:

a-2.	Impact on 2017 net income
a-3.	Impact on 2018 net income
a-4.	Impact on net income over 2017 and 2018

Assuming that Brandlin designates the forward contract as a fair value hedge of a foreign currency receivable, prepare journal entries for these transactions in U.S. dollars. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to 2 decimal places.)

Req B2 - B4

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No	Date	General Journal	Debit	Credit
2	12/01/2017	No journal entry required

b-2. What is the impact on 2017 net income? b-3. What is the impact on 2018 net income? b-4. What is the impact on net income over the two accounting periods? (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

Need Help is solving solution as follow:

b-2.	Impact on 2017 net income
b-3.	Impact on 2018 net income
b-4.	Impact on net income over 2017 and 2018