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18. Matahari Corporation, a U. S. company, purchased inventory from a foreign supplier. The transaction was DW700,000 (dw dwejies) on November 1, 2006. The account
18. Matahari Corporation, a U. S. company, purchased inventory from a foreign supplier. The transaction was DW700,000 (dw dwejies) on November 1, 2006. The account is to be paid January 31, 2007. Mataharie, on November 1, entered into a forward contract for DW 700,000 to hedge the January 31 account payable. Matahari accounts for this as a cash flow hedge. The present value factor is 0.922. Forward Spot Contract Rate $1.00 $1.02 $1.05 Rate November 1, 2006 December 31, 2006 January 31, 2007 $1.03 $1.04 N/A A. M ake the appropriate entry or entries for November 1, 2006. B. Make the appropriate entry or entries for December 31, 2006
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