Each of the following situations is independent of the others. Brown Industries is a U.S. company with a December 31 year-end, that regularly has transactions denominated in Canadian dollars. Use the following information on exchange rates (U.S.$/C$) to answer each question. Spot Rate Forward Rate for February 1, 2021 Delivery September 1, 2020 $0.774 $0.780 October 1, 2020 0.785 0.786 December 31, 2020 0.805 0.807 February 1, 2021 0.820 0.820 

Required For each situation, make the journal entries necessary to record the events, including year-end adjustments. 

a. On October 1, 2020, Brown Industries takes delivery of merchandise from Buster Boys Suppliers. Brown pays Buster Boys Suppliers C$100,000 on February 1, 2021. This is an unhedged import transaction.

b. On September 1, 2020, Brown Industries issues a purchase order to buy merchandise from Buster Boys Suppliers. Delivery will take place on October 1, 2020, and Brown will pay Buster Boys Suppliers C$100,000 on February 1, 2021. On September 1, 2018, Brown enters into a forward contract with XYZ Exchange for the purchase of C$100,000, to be delivered February 1, 2021. The forward is a hedge of a firm purchase commitment. Delivery and payment occur as planned. 

c. On September 1, 2020, Brown Industries forecasts that it will buy merchandise from a Canadian supplier. Delivery and payment of C$100,000 is expected to take place on February 1, 2021. On September 1, 2020, Brown enters into a forward contract with Big Money Exchange for the purchase of C$100,000, to be delivered February 1, 2021. The forward is a hedge of a forecasted transaction.

The merchandise purchase occurs as forecasted, and the merchandise is sold in March, 2021 for $115,000 in cash. Brown records cost of goods sold at the time of sale.