Lamont Company is a Canadian company that produces electronic switches for the telecommunications industry. Lamont regularly imports component parts from Sousa Ltd$.,$ a supplier located in Mexico, and makes payments in Mexican pesos $($MXN$/$Mex$).$ Based on past experience, Lamont Company expects to purchase raw materials from Sousa at a cost of Mex$25,000,000$ on March $1,$ Year $2.$ To hedge this forecasted transaction, Lamont enters into a four$-$month forward contract on October $31,$ Year $1$ to purchase $25$ million pesos on March $1,$ Year $2.$ It appropriately designates the forward contract as a cash flow hedge of the Mexican peso liability exposure. On March $1,$ Year $2,$ the forward contract is settled with the bank and Sousa is paid for delivering the goods to Lamont.

The following spot and forward exchange rates exist during the period October to March:

Spot Rates Forward Rates$*$

October $31,$ Year $1$ Mex$1=$ $$0\mathrm{.}135$ Mex$1=$ $$0\mathrm{.}138$

December $31,$ Year $1$ Mex$1=$ $$0\mathrm{.}137$ Mex$1=$ $$0\mathrm{.}139$

March $1,$ Year $2$ Mex$1=$ $$0\mathrm{.}141$ Mex$1=$ $$0\mathrm{.}141$

$*$For contracts expiring on March $1,$ Year $2.$

Required:

$($a$)$ Prepare all journal entries $($using net method$)$ required to record the transactions described above. $($Enter your answers in whole dollars and not in millions. 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 $31,$ Year $1$

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Record the forward contract.

December $31,$ Year$)1$

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Revalue the forward contract at fair value.

March $1,$ Year $2$

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Revalue the forward contract at fair value.

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Record the forward contract with bank.

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Record the purchase of inventory.

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Clear accumulated other comprehensive income $($OCI$).$

$($b$)$ Prepare a December $31,$ Year $1,$ partial trial balance of the accounts used in part $($a$).($Leave no cells blank $-$ be certain to enter $"0"$ wherever required. Enter your answers in whole dollars and not in millions. Omit $ sign in your response.$)$

Partial trial balance $$ December $31,$ Year $1$

DR CR

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