Just need help with parts b and d. Please show the full solution thanks so much. Have a nice day!
On October 1, Year 6, Versatile Company contracted to sell merchandise to a customer in Switzerland at a selling price of CHF436,000. The contract called for the merchandise to be delivered to the customer on January 31, Year 7, with payment due on delivery. On October 1, Year 6, Versatile arranged a forward contract to deliver CHF436,000 on January 31, Year 7. at a rate of CHF1 = $1.21. Versatile's year-end is December 31 The merchandise was delivered on January 31, Year 7, and CHF436,000 were received and delivered to the bank. Exchange rates were as follows: October 1, Year 6 December 31, Year 6 January 31, Year 7 Spot Rates CHFL - $1.19 CHF1 = $1.22 CHF1 = $1.20 Forward Rates CHF1= 121 CHEL - $1.23 CHEL - $1.20 **For contracts expiring on January 31, Year 7. Required: (a) Prepare the journal entries (using net method) that Versatile should make to record the events described assuming that the forward contract is designated as a cash flow hedge. (In cases where no entry is required, please select the option "No journal entry required for your answer to grade correctly. Leave no cells blank - be certain to enter "0" wherever required.) Date General Journal Debit Credit October 1, Year 6 No journal entry required No journal entry required Record the forward contract. December 31, Year 6 other comprehensive income 8720 Forward contract Record the adjustment of forward contract to forward rate. 8720 January 31, Year 7 Cash (CHY) 523200 523200 Sales Record the sales. Forward contract 13080 Other comprehensive income 13080 Record the adjustment of forward contract to forward rate. Other comprehensive income 4360 Sales Record the adjustment of other comprehensive income. 4360 Canh 527560 Forward contract 4360 523200 Cash (CHE) Record the forward contract with bank. (b) Prepare a partial trial balance of the accounts used as at December 31, Year 6. (Leave no cells blank - be certain to enter "O" wherever required. Omit $ sign in your response.) Account Forward contract Partial trial balance December 31, Year 6 Debit $ Credit $ 527560 other comprehensive income $ 8720 $ 0 (c) Prepare the journal entries (using net method) that Versatile should make to record the events described, assuming that the forward contract is designated as a fair value hedge. (In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank - be certain to enter "0" wherever required.) Debit Credit Date October 1, Year 6 General Journal No journal entry required No journal entry required Record the forward contract. 0 December 31, Year 6 Exchange gains and losses 9720 8720 Forward contract Record the adjustment of forward contract to forward rate. Commitment receivable 9720 Exchange gains and losses 8720 Record the adjustment of upcoming accounts receivable value to the forvard rate. January 31, Year 523200 Cash (CHE) Sales Record the sales. 523200 13080 Forward contract 13080 Exchange gains and losses Record the adjustment of forward contract to forward rate. Exchange gains and losses 13080 Commitment receivable 13080 Record the adjustment of upcoming accounts receivable value to the forvard rate. Commitment receivable 4360 Sales 4360 Record to clear other commitment receivable to sales account. Cash 527560 Forward contract 4360 523200 Cash (CHE) Record the forward contract with bank. (d) Prepare a partial trial balance of the accounts used as at December 31, Year 6. (Leave no cells blank - be certain to enter "O" wherever required. Omit $ sign in your response.) Partial trial balance December 31, Year 6 Account Debit Commitment receivable $ 8720 Credit $ Forward contract $ 0 $ 0 Exchange gains and losses $ 0 $ 0
