Complete journal entries to hedge an unrecognized foreign currency firm commitment as a foreign currency fair value hedge.

ACT506 Module 5 Critical Thinking Assignment Option #1 Journal Entries for Hedging an Unrecognized Foreign Currency Firm commitment: A Foreign Currency Fair Value Hedge Information: 1). 2). 3). 4). 5). 6). Push Corp. operates in the United States. It uses the Euro for local currency transactions. On Oct 01, 20x7, Push Corp. orders inventory items from German Corporation. Within 30 days, the delivery of the German inventory parts will take place, Nov 1, 20x7. The contract price is Euro 5,000 to be paid in 180 days, 6 months. On Oct 01, 20x7, Push Corp. hedges its foreign currency payable commitment with a forward exchange contract to r Relevant exchange Rates 10/1/20x7 Spot Rate 1.1 Forward Exchange Rate 1.25 210 days 11/1/20x7 1.15 1.3 180 days 12/31/20x7 1.2 1.35 120 days 28-Apr-18 1.15 0 0 ncy Fair Value Hedge rward exchange contract to receive Euro 5,000 in 210 days (30+180). Journal entries for hedging an unrecognized Foreign Currency Firm commitment: A Foreign Currency Fair Value Hedge Journal Entries: A 10/1/20x7 Foreign Currency Receivable from Exchange Broker Dollars Payable to Exchange Broker($) (Record signed forward exchange contract for receipt of 5,000 Euro in 210 days) B. 11/1/20x7 Foreign Currency Receivable from Exchange Broker Foreign Currency Transaction Gain (Record adjustment of forward contract to fair Value) C. 11/1/20x7 Foreign Currency Transaction loss Firm Commitment 11/1/20x7 Inventory Firm Commitment Accounts Payable (Euro) 12/31/20x7 Foreign Currency Receivable (EURO) Foreign Currency Gain Dec 31 20x7 Foreign Currency Loss Accounts Payable 4/28/20x7 Foreign Currency loss Foreign Currency Receivable Accts Payable Foreign Currency Gain 4/28/20x7 Dollars Payable to Broker Cash Foreign Currency Units Foreign Currency Rec Acct Payable Foreign Currency Units urrency Fair Value Hedge uro in 210 days) Debit Credit