Forward exchange contract designated as a cash flow hedge of a foreign currency denominated forecasted sale of inventory strengthening SUS On October 15, 2018our US-based company received a cancelable purchase order from a Luxembourg based retailer. The purchase order states that our company will sell to the Luxembourgish company, on February 1 2019, 70,000 units of an inventory item with a sales price of 11.00 each. The purchase order also specifies that the Luxembourgish company will make payment in Euros on that same date. Our company does recurring business with the Luxembourgish company however, the cancelable purchase order includes no monetary penalties for nonperformance. Also, on October 15, 2018, our company entered into a contract with a foreign currency exchange broker to sell 770.000 for settlement on February , 2019) to mitigate the risk of exchange rate fluctuation from this forecasted Sile. We will receive 3123 per el which is the forward rate on October 15,2018, for settlement on February 1, 2019 our company's functional currencys the US dollar and our forward scharge contract qualities as a cash flow hedge. The relevant exchange rates and related balances for the period from October 15, 2018 to February 1, 2019 ore as follows: Derivative Forward Forecasted Forward Sport Rate (SUS-U Transaction - Blekin Sale PV ARE Chang Dober 2011 Dember 11, 2011 February 2010 1 1.11 1.10 1:30 1.10 100 100 30,000 7.700 191.100 For settlement on February 1, 2019 gnore discounting in the computation of fair values, a. Prepare the journal entries to record the sale and all adjustments required for the forecasted sale and forward contractat October 15, 2016 December 31, 2018, and February 1, 2019 Note: if no entry is required, select "No entry as your answers under Description and leave the debit and credit answers blank creo) Hedged Transaction Date Description Debit Credit TO 0 0 0 12/31/10 . 0 3 0 2 D O CF Hedge Description Debit Credit Date 10/15/18 0 4 0 12/31/18 e 0 e 0 2/1/19 e Oo e To record change in value. 0 OO 0 To record the net settlement 0 Oo 4 0 To record reclassification b. Reconcile to the forward rate at the forward contract's inception the net cash received for both the sale of goods and the settlement of the forward-contract durative Net cash received for sale of goods and settlement of the forward contract derivative is 50 What amount of sales was recognized in the quarter ending December 31, 2018? Note: Do not use a negative sign with any of your answers below. $0 What amount of sales was recognized in the quarter ending March 31, 20192 50 What is the total amount of sales recognized across the quarters ending December 1, 2018, and March 31, 2019 50 Forward exchange contract designated as a cash flow hedge of a foreign currency denominated forecasted sale of inventory strengthening SUS On October 15, 2018our US-based company received a cancelable purchase order from a Luxembourg based retailer. The purchase order states that our company will sell to the Luxembourgish company, on February 1 2019, 70,000 units of an inventory item with a sales price of 11.00 each. The purchase order also specifies that the Luxembourgish company will make payment in Euros on that same date. Our company does recurring business with the Luxembourgish company however, the cancelable purchase order includes no monetary penalties for nonperformance. Also, on October 15, 2018, our company entered into a contract with a foreign currency exchange broker to sell 770.000 for settlement on February , 2019) to mitigate the risk of exchange rate fluctuation from this forecasted Sile. We will receive 3123 per el which is the forward rate on October 15,2018, for settlement on February 1, 2019 our company's functional currencys the US dollar and our forward scharge contract qualities as a cash flow hedge. The relevant exchange rates and related balances for the period from October 15, 2018 to February 1, 2019 ore as follows: Derivative Forward Forecasted Forward Sport Rate (SUS-U Transaction - Blekin Sale PV ARE Chang Dober 2011 Dember 11, 2011 February 2010 1 1.11 1.10 1:30 1.10 100 100 30,000 7.700 191.100 For settlement on February 1, 2019 gnore discounting in the computation of fair values, a. Prepare the journal entries to record the sale and all adjustments required for the forecasted sale and forward contractat October 15, 2016 December 31, 2018, and February 1, 2019 Note: if no entry is required, select "No entry as your answers under Description and leave the debit and credit answers blank creo) Hedged Transaction Date Description Debit Credit TO 0 0 0 12/31/10 . 0 3 0 2 D O CF Hedge Description Debit Credit Date 10/15/18 0 4 0 12/31/18 e 0 e 0 2/1/19 e Oo e To record change in value. 0 OO 0 To record the net settlement 0 Oo 4 0 To record reclassification b. Reconcile to the forward rate at the forward contract's inception the net cash received for both the sale of goods and the settlement of the forward-contract durative Net cash received for sale of goods and settlement of the forward contract derivative is 50 What amount of sales was recognized in the quarter ending December 31, 2018? Note: Do not use a negative sign with any of your answers below. $0 What amount of sales was recognized in the quarter ending March 31, 20192 50 What is the total amount of sales recognized across the quarters ending December 1, 2018, and March 31, 2019 50
