On January $2,2023,$ Sunland Inc. agrees to buy $$1,120$ in U$.$S$.$ currency for $$1,250$ in Canadian currency in $30$ days from Bowen Bank.

The forward contract not only transfers to the holder the right to increases in value of the underlying $($in this case, U$.$S$.$ dollars$),$ it also

creates an obligation to pay a fixed amount at a specified date $($in this case, $$1,250).$ Assume that the spot rate is U$.$S$.$ $$1=$ CAD $$1\mathrm{.}06.$

The contract is priced such that the fair value is $$0$ on inception. Assume that the fair value of the contract is $$58$ on January $5,2023.$

On January $31,$ the contract moves into a loss position; that is$,$ if the contract were settled on that date, the company would suffer an

overall loss of $$32.$ This might occur, for instance, if the value of the U$.$S$.$ currency declines. In this case, Sunland is locked in to pay

$$1,250$ for something that is worth less than that amount.

Prepare the journal entries to subsequently remeasure the forward contract. $($Credit account titles are automatically indented when the

amount is entered. Do not indent manually. If no entry is required, select $"$No Entry" for the account titles and enter $0$ for the amounts. List all

debit entries before credit entries.$)$ On January $2,2023,$ Sunland Inc. agrees to buy $$1,120$ in U$.$S$.$ currency for $$1,250$ in Canadian currency in $30$ days from Bowen Bank.

The forward contract not only transfers to the holder the right to increases in value of the underlying $($in this case, U$.$S$.$ dollars$),$ it also

creates an obligation to pay a fixed amount at a specified date $($in this case, $$1,250).$ Assume that the spot rate is U$.$S$.$ $$1=$ CAD $$1\mathrm{.}06.$

The contract is priced such that the fair value is $$0$ on inception. Assume that the fair value of the contract is $$58$ on January $5,2023.$

On January $31,$ the contract moves into a loss position; that is$,$ if the contract were settled on that date, the company would suffer an

overall loss of $$32.$ This might occur, for instance, if the value of the U$.$S$.$ currency declines. In this case, Sunland is locked in to pay

$$1,250$ for something that is worth less than that amount.

Prepare the journal entries to subsequently remeasure the forward contract. $($Credit account titles are automatically indented when the

amount is entered. Do not indent manually. If no entry is required, select $"$No Entry" for the account titles and enter O for the amounts. List all

debit entries before credit entries.$)$