Exercise 12-9

Sharon Myers, chief finance officer for Sitco Products, convinced the president of the company to enter into a 90-day forward contract to sell 890,000 Swedish kronas as a speculative venture. When the forward contract was acquired on November 1, 2014, the spot rate for the krona was $0.5045 and the 90-day future rate was $0.5085. At December 31, 2014, the end of the firms fiscal year, the spot rate was $0.4981 and the future rate for kronas to be sold on January 30, 2015, was $0.4996.

On January 30, 2015, the spot rate was $0.4826.Prepare all necessary journal entries in regard to the forward contract.