Brandlin Company of Anaheim, California, purchases materials from a foreign supplier on December 1, 2017, with payment of 31,000 korunas to be made on March 1, 2018. The materials are consumed immediately and recognized as cost of goods sold at the date of purchase. On December 1, 2017, Brandlin enters into a forward contract to purchase 31,000 korunas on March 1, 2018. Relevant exchange rates for the koruna on various dates are as follows: Date December 1, 2017 December 31, 2017 March 1, 2018 Spot Rate $ 4.90 5.00 5.15 Forward Rate (to March 1, 2018) $ 4.975 5.100 N/A Brandlin's incremental borrowing rate is 12 percent. The present value factor for two months at an annual interest rate of 12 percent (1 percent per month) is 0.9803. Brandlin must close its books and prepare financial statements at December 31. a-1. Assuming that Brandlin designates the forward contract as a cash flow hedge of a foreign currency payable and recognizes any premium or discount using the straight-line method, prepare journal entries for these transactions in U.S. dollars. a-2. Assuming that the purchased parts became a part of the cost of goods sold in 2017, what is the impact on 2017 net income? a-3. What is the impact on 2018 net income? a-4. What is the impact on net income over the two accounting periods? b-1. Assuming that Brandlin designates the forward contract as a fair value hedge of a foreign currency payable, prepare journal entries for these transactions in U.S. dollars. b-2. Assuming that the purchased parts became a part of the cost of goods sold in 2017, what is the impact on net income in 2017 and in 2018? b-3. What is the impact on net income over the two accounting periods? Req A1 Reg A2 to A4 Reg B1 Reg B2 to B3 Assuming that Brandlin designates the forward contract as a cash flow hedge of a foreign currency payable and recognizes any premium or discount using the straight-line method, prepare journal entries for these transactions in U.S. dollars. (Ifr entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your answers to 2 decimal places.) Show less No General Journal Credit Date 12/01/2017 Debit 151,900.00 Cost of goods sold Accounts payable (K) 151,900.00 12/01/2017 No journal entry required 12/31/2017 3,100.00 Foreign exchange gain Accounts payable (K) 3,100.00 12/31/2017 3,799.00 Forward contract Accumulated other comprehensive income 3,799.00 5 12/31/2017 3,100.00 Accumulated other comprehensive income Gain on forward contract 3,100.00 12/31/2017 775.00 Premium expense Accumulated other comprehensive income 775.00 03/01/2018 Foreign exchange loss Accounts payable (K) 03/01/2018 Forward contract Accumulated other comprehensive income 03/01/2018 Accumulated other comprehensive income Gain on forward contract 10 03/01/2018 Premium expense Accumulated other comprehensive income 03/01/2018 Foreign currency (K) Cash 00 000 00 Forward contract 03/01/2018 Accounts payable (K) Foreign currency (K) Req A1 Req A2 to A4 Req B1 Reg B2 to B3 a-2. Assuming that the purchased parts became a part of the cost of goods sold in 2017, what is the impact on 2017 net income? a-3.What is the impact on 2018 net income? a-4.What is the impact on net income over the two accounting periods? (Do not round intermediate calculations. In case of negative impact on income, answer should be entered with a minus sign.) Show less Nicom Impact on 2017 income Impact on 2018 income Impact on net income over 2017 and 2018 Reg A1 Req B1 > Req A1 Reg A2 to A4 Reg B1 Reg B2 to B3 Assuming that Brandlin designates the forward contract as a fair value hedge of a foreign currency payable, prepare journal entries for these transactions in U.S. dollars. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your answers to 2 decimal places.) Show less No General Journal Debit Credit Date 12/01/2017 Cost of goods sold Accounts payable (K) 12/01/2017 No journal entry required 12/31/2017 Foreign exchange loss Accounts payable (K) 12/31/2017 No journal entry required 12/31/2017 Forward contract Gain on forward contract 12/31/2017 No journal entry required 03/01/2018 03/01/2018 No journal entry required 9 03/01/2018 Forward contract Gain on forward contract 03/01/2018 No journal entry required 03/01/2018 Foreign currency (K) Cash Forward contract 12 03/01/2018 Accounts payable (K) Foreign currency (K) Reg A1 Reg A2 to A4 Req B1 Req B2 to B3 b-2. Assuming that the purchased parts became a part of the cost of goods sold in 2017, what is the impact on net income in 2017 and in 2018? b-3. What is the impact on net income over the two accounting periods? (Do not round intermediate calculations. Round your answers to 2 decimal places. In case of negative impact on income, answer should be entered with a minus sign.) Show less Impact on 2017 income nieniem Impact on 2018 income Impact on net income over 2017 and 2018 Brandlin Company of Anaheim, California, purchases materials from a foreign supplier on December 1, 2017, with payment of 31,000 korunas to be made on March 1, 2018. The materials are consumed immediately and recognized as cost of goods sold at the date of purchase. On December 1, 2017, Brandlin enters into a forward contract to purchase 31,000 korunas on March 1, 2018. Relevant exchange rates for the koruna on various dates are as follows: Date December 1, 2017 December 31, 2017 March 1, 2018 Spot Rate $ 4.90 5.00 5.15 Forward Rate (to March 1, 2018) $ 4.975 5.100 N/A Brandlin's incremental borrowing rate is 12 percent. The present value factor for two months at an annual interest rate of 12 percent (1 percent per month) is 0.9803. Brandlin must close its books and prepare financial statements at December 31. a-1. Assuming that Brandlin designates the forward contract as a cash flow hedge of a foreign currency payable and recognizes any premium or discount using the straight-line method, prepare journal entries for these transactions in U.S. dollars. a-2. Assuming that the purchased parts became a part of the cost of goods sold in 2017, what is the impact on 2017 net income? a-3. What is the impact on 2018 net income? a-4. What is the impact on net income over the two accounting periods? b-1. Assuming that Brandlin designates the forward contract as a fair value hedge of a foreign currency payable, prepare journal entries for these transactions in U.S. dollars. b-2. Assuming that the purchased parts became a part of the cost of goods sold in 2017, what is the impact on net income in 2017 and in 2018? b-3. What is the impact on net income over the two accounting periods? Req A1 Reg A2 to A4 Reg B1 Reg B2 to B3 Assuming that Brandlin designates the forward contract as a cash flow hedge of a foreign currency payable and recognizes any premium or discount using the straight-line method, prepare journal entries for these transactions in U.S. dollars. (Ifr entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your answers to 2 decimal places.) Show less No General Journal Credit Date 12/01/2017 Debit 151,900.00 Cost of goods sold Accounts payable (K) 151,900.00 12/01/2017 No journal entry required 12/31/2017 3,100.00 Foreign exchange gain Accounts payable (K) 3,100.00 12/31/2017 3,799.00 Forward contract Accumulated other comprehensive income 3,799.00 5 12/31/2017 3,100.00 Accumulated other comprehensive income Gain on forward contract 3,100.00 12/31/2017 775.00 Premium expense Accumulated other comprehensive income 775.00 03/01/2018 Foreign exchange loss Accounts payable (K) 03/01/2018 Forward contract Accumulated other comprehensive income 03/01/2018 Accumulated other comprehensive income Gain on forward contract 10 03/01/2018 Premium expense Accumulated other comprehensive income 03/01/2018 Foreign currency (K) Cash 00 000 00 Forward contract 03/01/2018 Accounts payable (K) Foreign currency (K) Req A1 Req A2 to A4 Req B1 Reg B2 to B3 a-2. Assuming that the purchased parts became a part of the cost of goods sold in 2017, what is the impact on 2017 net income? a-3.What is the impact on 2018 net income? a-4.What is the impact on net income over the two accounting periods? (Do not round intermediate calculations. In case of negative impact on income, answer should be entered with a minus sign.) Show less Nicom Impact on 2017 income Impact on 2018 income Impact on net income over 2017 and 2018 Reg A1 Req B1 > Req A1 Reg A2 to A4 Reg B1 Reg B2 to B3 Assuming that Brandlin designates the forward contract as a fair value hedge of a foreign currency payable, prepare journal entries for these transactions in U.S. dollars. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your answers to 2 decimal places.) Show less No General Journal Debit Credit Date 12/01/2017 Cost of goods sold Accounts payable (K) 12/01/2017 No journal entry required 12/31/2017 Foreign exchange loss Accounts payable (K) 12/31/2017 No journal entry required 12/31/2017 Forward contract Gain on forward contract 12/31/2017 No journal entry required 03/01/2018 03/01/2018 No journal entry required 9 03/01/2018 Forward contract Gain on forward contract 03/01/2018 No journal entry required 03/01/2018 Foreign currency (K) Cash Forward contract 12 03/01/2018 Accounts payable (K) Foreign currency (K) Reg A1 Reg A2 to A4 Req B1 Req B2 to B3 b-2. Assuming that the purchased parts became a part of the cost of goods sold in 2017, what is the impact on net income in 2017 and in 2018? b-3. What is the impact on net income over the two accounting periods? (Do not round intermediate calculations. Round your answers to 2 decimal places. In case of negative impact on income, answer should be entered with a minus sign.) Show less Impact on 2017 income nieniem Impact on 2018 income Impact on net income over 2017 and 2018