Icebreaker Company (a U.S.-based company) sells parts to a foreign customer on December 1, 2020, with payment of 13,000 dinars to be received on March 1, 2021. Icebreaker enters into a forward contract on December 1, 2020, to sell 13,000 dinars on March 1, 2021. The forward points on the forward contract are excluded in assessing hedge effectiveness and are amortized to net income using a straight-line method on a monthly basis. Relevant exchange rates for the dinar on various dates are as follows: Date December 1, 2020 December 31, 2020 March 1, 2021 Spot Rate $ 3.10 3.20 3.35 Torward Rate (to March 1, 2021) $ 3.175 3.300 N/A Icebreaker must close its books and prepare financial statements at December 31 a-1. Assuming that Icebreaker designates the forward contract as a cash flow hedge of a foreign currency receivable, prepare journal entries for the sale and foreign currency forward contract in U.S. dollars. a-2. What is the impact on 2020 net income? a-3. What is the impact on 2021 net income? a-4. What is the impact on net income over the two accounting periods? b-1. Assuming that Icebreaker designates the forward contract as a fair value hedge of a foreign currency receivable, prepare journal entries for the sale and foreign currency forward contract in U.S. dollars. b-2. What is the impact on 2020 net income? Linn Debit 1 12/01/2020 Credit Accounts receivable (dinars) Sales 40,300 40,300 2 12/01/2020 No journal entry required 3 12/31/2020 Accounts receivable (dinars) Foreign Exchange Gain or Loss 1,300 1,300 4 12/31/2020 Other comprehensive income Forward contract 1,625 O 1,625 5 12/31/2020 Foreign Exchange Gain or Loss Other comprehensive income 1,300 Olo 1,300 6 12/31/2020 Other comprehensive income Foreign Exchange Gain or Loss 325 O 325 7 03/01/2021 Accounts receivable (dinars) Foreign Exchange Gain or Loss 1,950 1,950 8 03/01/2021 Other comprehensive income Forward contract 650 650 9 03/01/2021 Foreign Exchange Gain or Loss Other comprehensive income 1,950 1,950 10 03/01/2021 Other comprehensive income Foreign Exchange Gain or Loss 650 650 11 03/01/2021 Foreign currency (dinars) Accounts receivable (dinars) 43,550 43,550 12 03/01/2021 41,275 Cash Forward contract Foreign currency (dinars) 2,275 43,550 Req A1 ETTE Req A2 to A4 Req B1 Req B2 to B4 a-2. What is the impact on 2020 net income? a-3. What is the impact on 2021 net income? a-4. What is the impact on net income over the two accounting periods? (Negative amounts should be entered with a minus sign. Do not round intermediate calculations.) Impact on 2020 net income a- 2. a- 3. Impact on 2021 net income a- Impact on net income over 2020 and 2021 12/01/2020 Accounts receivable (dinars) Sales 40,300 40,300 2 12/01/2020 No journal entry required > 3 12/31/2020 Accounts receivable (dinars) Foreign Exchange Gain or Loss > 1,300 1,300 12/31/2020 Foreign Exchange Gain or Loss Forward contract 1,625 1,625 5 12/31/2020 No journal entry required 6 12/31/2020 Other comprehensive income Foreign Exchange Gain or Loss 7 03/01/2021 Accounts receivable (dinars) Foreign Exchange Gain or Loss 8 03/01/2021 Foreign Exchange Gain or Loss Accumulated other comprehensive income 9 03/01/2021 No journal entry required 10 03/01/2021 Foreign Exchange Gain or Loss Accumulated other comprehensive income 650 650 11 03/01/2021 Foreign currency (dinars) Accounts receivable (dinars) 43,550 43,550 12 03/01/2021 Cash Forward contract Foreign currency (dinars) 41,275 2.275 43,550 b-2. What is the impact on 2020 net income? b-3. What is the impact on 2021 net income? b-4. What is the impact on net income over the two accounting periods? (Do not round intermediate calculations. Negative amounts should be entered with a rginus sign.) Impact on 2020 net income b- 2. b- 3 b- 4. Impact on 2021 net income Impact on net income over 2020 and 2021