On August 1, 20X6, Smith Imports Inc. contracted to purchase teacups from England for 40,000.

The teacups were to be delivered on February 28, 20X7, with payment due on April 1, 20X7.

On August 1, 20X6, Smith entered into a 240-day forward contract to receive 40,000 pounds at a forward rate of 1 = $1.55

The forward contract was considered a fair value hedge.

Date	Spot Rate					Forward Rate for April 1, 20X7
August 1, 20X6		1	=	$	1.6		1	=	$	1.55
December 31, 20X6		1	=		1.63		1	=		1.6
February 28, 20X7		1	=		1.55		1	=		1.56
April 1, 20X7		1	=		1.545

The company's fiscal year end is December 31.

prepare all journal entries from August 1, 20X6, through April 1, 20X7.