On August 1, 2022, a U.S. company signed a noncancelable order to purchase inventory from a company located in Japan. The contracted price was 6,000,000 yen, payable on January 31, 2023. The machine will be delivered to the U.S. Company on November 1, 2022.

In order to hedge against a strengthening of the yen, the U.S. Company entered into a forward exchange contract on August 1, 2022, to purchase 6,000,000 yen on January 31,

2023. The forward contract was acquired to hedge the financial component of the foreign currency firm commitment.

On November 1, 2022, the transaction date, the U.S. Company received the inventory from the Japanese company. Spot and forward exchange rates on various dates follow:

spot rate forward exchange

($/1yen). ($/1 yen)

August 1, 2022. $.0080. $ .0084

November 1. 2022. $ .0085. $ .0087

December 31. 2022. $ .0083. .0086

January 31, 2022. $.0090

required:

Prepare all journal entries until the arrival of the merchandise on 11/1/2018, for the U.S. Company, which pertain to the acquisition of the inventory and the forward exchange contract. Indicate the date next to each journal entry. Assume a December 31 year-end. (HINT: the answer only 4 journal entries, 1 for

8/01/2022, and 3 for 11/1/2022).