Cherry Company, on September 5, 2015, contracts to sell wheat for €2,000,000 to For Company The wheat will be delivered March 1, 2016, and payment is due April 1, 2016. The year-end is December 31.

Cherry Co. hedges the commitment right away and designates this as a cash flow hedge.

Cherry Co. will account for the hedge using the gross method. The settlement date is Apr. 1.

	Rates:		spot rate	forward rate to Feb. 15, 2016
sign contract	sept. 5		1.600	1.610
year-end	Dec. 31		1.615	1.622
delivery date	March 1		1.630	1.640
settlement date	Apr. 1		1.645

Required:

Prepare all journal entries related to the hedge and the underlying purchase or sale. Use the gross method (record the hedge using a JE; not a memorandum entry) Prepare journal entries in standard form.