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:

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.