• 1

  Record the purchase of materials.

• 2

  Record the forward contract.

• 3

  Record the entry to revalue the foreign currency account payable.

• 4

  Record the foreign exchange gain or loss on the forward contract.

• 5

  Record the foreign exchange gain or loss on the forward contract.

• 6

  Record the entry to adjust the net amount recognized as foreign exchange gain or loss to reflect the amortization of the forward contract premium or discount.

• 7

  Record the entry to revalue the foreign currency account receivable.

• 8

  Record the foreign exchange gain or loss on the forward contract.

• 9

  Record the settlement of the forward contract.

• 10

  Record the entry to adjust the net amount recognized as foreign exchange gain or loss to reflect the amortization of the forward contract premium or discount.

• 11

  Record the settlement of the forward contract.

• 12

  Record the payment of dinars to the foreign supplier

Icebreaker Company (a U.S.-based company) purchases materials from a foreign supplier on December 1, 2020, with payment of 22,000 dinars to be made on March 1, 2021. The materials are consumed immediately and recognized as cost of goods sold at the date of purchase. On December 1, 2020, Icebreaker enters into a forward contract to purchase 22,000 dinars on March 1, 2021. Relevant exchange rates for the dinar on various dates are as follows: Date December 1, 2020 December 31, 2020 March 1, 2021 Spot Rate $ 4.00 4.10 4.25 Forward Rate (to March 1, 2021) $ 4.075 4.200 N/A Icebreaker Company (a U.S.-based company) purchases materials from a foreign supplier on December 1, 2020, with payment of 22,000 dinars to be made on March 1, 2021. The materials are consumed immediately and recognized as cost of goods sold at the date of purchase. On December 1, 2020, Icebreaker enters into a forward contract to purchase 22,000 dinars on March 1, 2021. Relevant exchange rates for the dinar on various dates are as follows: Date December 1, 2020 December 31, 2020 March 1, 2021 Spot Rate $ 4.00 4.10 4.25 Forward Rate (to March 1, 2021) $ 4.075 4.200 N/A