Forward exchange contract designated as a fair value hedge of a foreign$-$currency$-$denominated accounts receivable, weakening $US

On October $15,2021,$ our company sells to a retailer located in Austria $16,200$ units of a product at a sales price of $35$ per unit, and we require payment in Euros $().$ The exchange rate on the date of sale is $$1\mathrm{.}25$:$1,$ and the due date for payment is January $15,2022.$ To mitigate the risk of exchange rate fluctuations between the sale date and the collection date, on October $15,2021,$ our company enters into a forward contract with an exchange broker. The contract obligates our company to deliver $567,000$ on January $15,2022,$ while we lock in the $US we will receive on that date at the forward rate of $$1\mathrm{.}29$:$1($i$.$e$.,$ the forward rate on October $15,2021$ for settlement on January $15,2022).$ Assume this derivative qualifies as a fair value hedge, and our company$$s functional currency and reporting currency is the $US$.$ The following table includes the spot rates, forward rates, and related values of the accounts receivable and forward contract on October $15,2021,$ December $31,2021,$ and January $15,2022.$ When computing fair values, ignore discounting.

FC Accounts Receivable Derivative$$Forward

Date Spot Rate

$($$US $=1)$ Carrying

Value Change in

Carry Val. Forward

Ratea

$($$US $=1)$ FV Asset

$($Liability$)$b Change

in FV

October $15,20211\mathrm{.}25$ $$708,7501\mathrm{.}29$

December $31,20211\mathrm{.}36771,120$ $$62,3701\mathrm{.}37$ $$(45,360)$ $$(45,360)$

January $15,20221\mathrm{.}40793,80022,6801\mathrm{.}40(62,370)(17,010)$

a For settlement on January $15,2022$

b Ignore discounting in the computation of fair values.

a$.$ Prepare the journal entries to record the sale and all adjustments required for the accounts receivable and forward contract at October $15,2021,$ December $31,2021,$ and January $15,2022.$

Note: If no entry is required, select $"$No entry" as your answers under Description and leave the debit and credit answers blank $($zero$).$

Hedged Transaction

Date Description Debit Credit

$10/15/21$

Answer $1$

Answer $2$

Answer $3$

Answer $4$

Answer $5$

Answer $6$

$12/31/21$

Answer $7$

Answer $8$

Answer $9$

Answer $10$

Answer $11$

Answer $12$

$1/15/22$

Answer $13$

Answer $14$

Answer $15$

Answer $16$

Answer $17$

Answer $18$

To record the change in the $US value.

Answer $19$

Answer $20$

Answer $21$

Answer $22$

Answer $23$

Answer $24$

To record payment.

FV Hedge

Date Description Debit Credit

$10/15/21$

Answer $25$

Answer $26$

Answer $27$

Answer $28$

Answer $29$

Answer $30$

$12/31/21$

Answer $31$

Answer $32$

Answer $33$

Answer $34$

Answer $35$

Answer $36$

$1/15/22$

Answer $37$

Answer $38$

Answer $39$

Answer $40$

Answer $41$

Answer $42$

To record change in value.

Answer $43$

Answer $44$

Answer $45$

Answer $46$

Answer $47$

Answer $48$

To record the net settlement.

b$.$ Reconcile to the forward rate at the forward contract$$s inception the net cash received for both the settlement of the receivable and the settlement of the forward$-$contract derivative.

Net cash received from settlement of the receivable and forward$-$contract derivative is:

$

Answer $49$

c$.$ What amount of sales was recognized in the quarter ending December $31,2021?$

$

Answer $50$

What amount of sales was recognized in the quarter ending March $31,2022?$

$

Answer $51$

What is the total amount of sales recognized across the quarters ending December $31,2021,$ and March $31,2022?$