Brandlin Company of Anaheim, California, sells parts to a foreign customer on December 1, 2017, with payment of 31,000 korunas to be received on March 1, 2018. Brandlin enters into a forward contract on December 1, 2017, to sell 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 Forward Rate Spot Rate (to March 1, 2018) $ 4.90 $4.975 5.00 5.100 5.15 N/A Brandlin's incremental borrowing rate is 9 percent. The present value factor for two months at an annual interest rate of 9 percent (0.75 percent per month) is 0.9852. 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 receivable and recognizes any premium or discount using the straight-line method, prepare journal entries for these transactions in U.S. dollars. a-2. What is the impact on 2017 net income? a-3. What is the impact on 2018 net income? -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 receivable, prepare journal entries for these transactions in U.S. dollars. b-2. What is the impact on 2017 net income? b-3. What is the impact on 2018 net income? b-4. What is the impact on net income over the two accounting periods? Reg A1 Reg A2 to A4 Req B1 Reg B2 to 84 Assuming that Brandlin designates the forward contract as a cash flow hedge of a foreign currency receivable and recognizes any premium or discount using the straight-line method, 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 final answers to 2 decimal places.) Show less View transaction list Journal entry worksheet 2 3 4 5 6 7 8 ..... 12 Record the sales and foreign currency account receivable. Note: Enter debits before credits General Journal Debit Credit Date 1201/2017 Journal entry worksheet 1 2 3 4 5 6 7 8 ..... 12 > Record the forward contract. Note: Enter debits before credits Date General Journal Debit Credit 12/01/2017 Journal entry worksheet 1 2 3 4 5 6 7 8 ..... 12 Record the entry for changes in the exchange rate. Note: Enter debits before credits Date General Journal Debit Credit 12/31/2017 Journal entry worksheet Record the sales and foreign currency account receivable. Note: Enter debits before credits General Journal Debit Credit Date 12/01/2017 Journal entry worksheet
