Hedged Purchase Commitment and Exposed Liability Position, with Adjusting Entries On November 20, 2020, International Foods, a U.S. company, agreed to purchase merchandise from a Hong Kong supplier at a price of HK$10,000,000. The merchandise will be delivered on January 10, 2021, and the amount owing is payable on April 10, 2021, in Hong Kong dollars. To hedge the expected future payment, International entered a forward contract for purchase of HK$10,000,000 on April 10, 2021. On January 10, 2021, the merchandise was delivered as promised. On April 10, International closed the forward contract and used the Hong Kong dollars to pay its supplier. International's accounting year ends December 31. Exchange rates ($/HK$) are as follows: Forward rate for delivery Spot rate April 10, 2021 November 20, 2020 $0.1289 $0.1293 December 31, 2020 0.1299 January 10, 2021 April 10, 2021 Required Prepare the journal entries International Foods made on January 10, 2021 and April 10, 2021 to record the above transactions, as well as its end-of-year adjusting entries on December 31, 2020. Date Description Debit Credit 0.1304 0.1302 0.1301 0.1303 12/31/20 To record change in fair value of the forward contract To record the gain or loss on the firm purchase commitment. 1/10/21 To record change in fair value of the forward contract. To record the gain or loss on the firm purchase commitment. To record delivery of the goods at the current spot rate. To adjust the carrying value of the goods for the change in value of the firm commitment during the commitment period. 4/10/21 To record the gain or loss on accounts payable. To record change in fair value of forward purchase contract. Cash To record fulfillment of the forward contract. To record payment to the supplier