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Amazing Garden Corporation made a sale to a foreign customer on April 1, 20X1 for 70000 foreign currency units (FCU). Payment was received on May
Amazing Garden Corporation made a sale to a foreign customer on April 1, 20X1 for 70000 foreign currency units (FCU). Payment was received on May 15, 20X1. The following exchange rates apply:
| Date | US Dollar per FCU |
| 4/1/20X1 | 1.4000000000000001 |
| 4/30/20X1 | 1.4500000000000002 |
| 5/15/20X1 | 1.3800000000000001 |
Round all FCU rates to the nearest cent.
- Prepare all necessary entries for Amazing Garden Corporation in connection with the sale, assuming that the company closes its books on April 30, 20X1 to prepare interim financial statements.
- Explain how the company may use a forward contract as of April 1, 20X1 to mitigate any potential foreign exchange gains or losses and the impact that the above spot rates would have on the forward contract at the various dates.
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