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On December 1, 20x1, Micro World Inc. entered into a 120-day forward contract to sell 100,000 Australian dollars (A$). Micro World's fiscal year ends on
On December 1, 20x1, Micro World Inc. entered into a 120-day forward contract to sell 100,000 Australian dollars (A$). Micro World's fiscal year ends on December 31. The direct exchange rates follow: Date December 1, 20x1 December 31, 20X1 January 30, 20X2 March 31, 20X2 Spot Rate $0.600 0.610 0.608 0.602 Forward Rate for March 31, 20x2 $0.699 0.612 0.605 Required: Prepare all journal entries for Micro World Inc. for the following independent situations. 1. The forward contract was to manage the foreign currency risks from the sale of furniture for A$100,000 on December 1, 20X1, with payment due on March 31, 20X2. The forward contract is not designated as a hedge. (If no entry is required for a transaction/event, select "No journal entry required in the first account field.) s 2. The forward contract was to hedge an anticipated sale of furniture on January 30. The sale took place on January 30 with payment due on March 31, 20X2. The derivative is designated as a cash flow hedge. The company uses the forward exchange rate to measure hedge effectiveness. (If no entry is required for a transaction/event, select "No journal entry required in the first account field.) View transaction list Journal entry worksheet Record the sale of the furniture and its value at the spot rate. Note: Enter debits before credits. Date General Journal Debit Jan. 30, 20X2 Credit Record entry Clear entry View general joumal View transaction list Journal entry worksheet Record the revaluation of the foreign currency payable and record into OCI the effective portion of change in fair value of the derivative designated as a cash flow hedge. Note: Enter debits before credits. Date General Journal Debit Credit Mar. 31, 20X2 Record entry Clear entry View general journal View transaction list ~ Journal entry worksheet Record the revaluation of the foreign currency receivable using the spot rate and recognizing the change into current earnings as specified by ASC 830. Note: Enter debits before credits. Date General Journal Debit Credit Mar. 31, 20X2 Record entry Clear entry View general journal View transaction list Journal entry worksheet Record the receipt of U.S. dollars from an exchange broker. Note: Enter debits before credits. Date General Journal Debit Credit Mar 31. 20X2 Record entry Clear entry View general journal hsaction/event, select "No journal entr View transaction list Journal entry worksheet Record the payment of A$100,000 to the broker in accordance with the forward contract signed on December 1. Note: Enter debits before credits. Date General Journal Mar. 31, 20X2 Debit Credit Record entry Clear entry View general journal Journal entry worksheet Int
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