E13-11

Speculative Forward Exchange Contract: Intervening Balance Sheet Date A U.S. speculator enters a forward contract on December 1, 19X1 to purchase 50,000 German marks for delivery in two months. On December 1, the spot rate for the mark was exist.49, and the two-month forward rate was exist.51. The U.S.: speculator's fiscal period ends December 31, 19X1, at which time the spot rate for the mark was exist.50 and the forward rate for a one-month delivery was exist.53. On February 1, 19X2, the spot rate for the mark was exist.52. Prepare entries to be recorded by the U.S. speculator on December 1, 19X1, December 31, 19X1, and February 1, 19X2