60. Use of futures contracts to hedge a receivable denominated in a foreign currency In May, our company sells $990,000 of inventory to a customer in France. The customer demands that the invoice be stated in Euros (E). The exchange rate on the date of sale is $1.32:1. Accordingly, the invoice is written for 750,000, and payment is due in 90 days. Our company feels that the $US has been over-sold and is likely to rebound during the next 90 days, thus lowering the $US equivalent of the receivable. The current futures price for 90-day delivery of $1.29 reflects our view. Since we feel that the $US is likely to strengthen even more, we purchase a forward contract to sell Euros at $1.29 after 90 days. Assume the following data relating to the spot and forward rates for the $US vis--vis the Euro: Spot Rate Forward Rate (for July settlement) $1.32:1 $1.29:1 $1.27:1 $1.26:1 $1.25:1 n/a May.. June 30. July... Prepare the journal entries to record the following: a. Account receivable and sale (ignore cost of goods sold) b. Adjusting entries on June 30 c. Collection of the accounts receivable in July