a. Prepare journal entries for Pumped Up to record the purchase of inventory; all entries associated with the forward contract; the adjusting entries on December 31, 20X7; and entries to record the revaluations and payment on February 14, 20X8.

b. What is the foreign currency transaction to be reported in Pumped Up's 20X7 income statement?

c. What is the foreign currency transaction to be reported in Pumped Up's 20X8 income statement?

d. What is the total foreign currency transaction to be reported for Pumped Up, 20X7 and 20X8 combined?

e. Gross profit to be reported in 20X8 income statement is _______?

f. Overall effect of these transactions on net income in 20X7 and 20X8 combined = ?

Purchase with Forward Exchange Contract and Intervening Fiscal Year-End Pumped Up Company purchased equipment from Switzerland for 140,000 francs on December 16, 20X7, with payment due on February 14, 20X8. On December 16, 20X7, Pumped Up also acquired a 60-day forward contract to purchase francs at a forward rate of SFr 1 = $.67. On December 31, 20X7, the forward rate for an exchange on February 14, 20x8, is SFr 1 = $.695. The spot rates were: December 16, 20X71 SFr = $.68 December 31, 20X7 1 SFr= .70 February 14, 20x8 1 SFr = .69 Partl Assume that the forward contract is not designated as a hedge but is entered into to manage the company's foreign currency-exposed accounts payable