ASI recently completed the development and installation of an accounting information system for a company located in Rio De Janeiro, Brazil. The company considered that all revenue realization criteria were satisfied and accordingly recorded on October 2, 2014, a receivable from the foreign company. The receivable is to be settled in 120 days on February 1 by the delivery of 350,000 real. To hedge against an unfavorable change in the foreign exchange rate, ASI acquired a forward contract to sell 350,000 real on February 1 for $0.4730 per real. The following exchange rates were quoted:

Exercise 12-7 ASI recently completed the development and installation of an accounting information system for a company located in Rio De Janeiro, Brazil. The company considered that all revenue realization criteria were satisfied and accordingly recorded on October 2, 2014, a receivable from the foreign company. The receivable is to be settled in 120 days on February 1 by the delivery of 350,000 real. To hedge against an unfavorable change in the foreign exchange rate, ASI acquired a forward contract to sell 350,000 real on February 1 for $0.4730 per real. The following exchange rates were quoted: Forward Rate Date Spot Rate (Delivery on 2/1) October 2 $0.4737 $0.4730 December 31 0.4895 0.4810 February 1 0.4950 ASI is a calendar-year company. (a) Prepare the journal entries to record the transactions, adjust the accounts on December 31, and settle the receivable and forward contract on February 1. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the unt titles : enter 0 for the