L02 33. Use of futures contracts to hedge a receivable denominated in a foreign currencyfair value Iled In MgSy, our company sells $675,000 of inventory to a customer in France. The customer demands that the invoice be stated in Euros (E). The exchange rate on lire date of sale is $1.35:l. Accordingly, the invoice is written for 500,000, and payment is due in-days. Our company feels that the $115 has been oversold and is likely to rebound during the next 90 days, thus lowering the $US equivalent of the receivable. The current futures price for I:i'iIIday delivery of $1.30 reflects our view. Since we feel that the $US is likely to strengthen even more, we purchase a forward contract to sell Euros at $1.30 after 90 days. When the receivable is collected in 90 days, the exchange rate at that date is $1.23: El. Assmne the following data relating to the spot and forward rates for the $US visavis the Euro: Spot Hate Forward Hate May ...................... $1.35:1 31.30% June at} ................... $1.30:1 $1.28:1 July ...................... $1.2?:1 nfa Required Prepare the journal entries to record the following: a. Account receivable and sale [ignore cost of goods sold] I}. Adjusting entries on June 30 6. Collection of the account receivable in July