Hewlett Packard contracts to sell mainframe computers to a stock brokerage firm in the Philippines on November 1, 2021, with an asking price of 2,000,000 pesos (PhP) in The Philippines. The contract states that the firm will take delivery and will pay for the equipment on February 1, 2022.

On November 1, 2021, Hewlett Packard enters into a forward contract to sell 2,000,000 pesos for $0.01896 on February 1, 2022.

Spot rates and the forward rates for February 1, 2022, settlement were as follows (US$ : PhPeso):

Forward Rate

Spot Rate for 2/1/22

November 1, 2021 $0.01908 $0.01896

Balance sheet date (12/31/2021) 0.01898 0.01888

February 1, 2022 0.01894

On February 1, the equipment was sold for 2,000,000 pesos. The cost of the equipment was $28,000.

Required, compute for the following:

1. February 1 credit to Sales

2. December 31 Foreign exchange gain (loss) from firm commitment

3. February 1 Cash received from bank (forex dealer)

4. February 1 Investment in Foreign Currency credited in journal entry.

5. Dollars Receivable from Bank credited on February 1, 2022

6. Gross Profit to be recognized on February 1, 2022 from this transaction.