Forward exchange contract designated as a fair value hedge of a foreign$-$currency$-$denominated

firm commitment to sell inventory, weakening $US

Our U$.$S$.-$based company enters into a "firm commitment" with a Malta$-$based retailer on November

$10,2021.$ The firm commitment requires our company to sell $98,000$ units of an inventory item cost$-$

ing $9\mathrm{.}00$ each to the Maltese company. Our company is contractually committed to ship the inventory

$($i$.$e$.,$ title transfers$)$ on February $10,2022,$ with payment in Euros on the same date. Our company does

recurring business with the Maltese company, and the firm commitment includes significant monetary

penalties for nonperformance. Also assume, on November $10,2021,$ our company enters into a contract

with a foreign currency exchange broker to sell Euros $($for settlement on February $10,2022)$ to mitigate

the risk of exchange rate fluctuation. Our company's functional currency is the $US$,$ and our forward

the period from November $10,2021,$ to February $10,2022,$ are as follows:

a For settlement on February $10,2022,{?}^b$ Ignore discounting in the computation of fair values.

a$.$ Prepare the journal entries to record the sale and all adjustments required for the firm commitment

and forward contract at November $10,2021,$ December $31,2021,$ and February $10,2022.$

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 derivative.

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

sales was recognized in the quarter ending March $31,2022?$ Explain these amounts. What is the

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

$2022?$ Reconcile this total to your answer to part $b.$