On June 1 Hammer Company purchased inventory from a foreign

supplier at a price of 75,000 FCU (FCU is "foreign currency units")

Hammer will make payment in three months on September 1.

On June 1, Hammer entered into a forward contract

maturing on September 1 as a fair value hedge

of its FCU lliability.

help all journal entries, including adjusting entries, to record

the transaction and the forward contract.

Date Spot rate Forward rate*

June 1 $0.80 $0.85

June 30 $0.83 $0.84

Sept. 1 $0.86

*Forward rate is for a contract written on June 1 to mature on September 1.

(Disregard the impact of any interest factor or discount rate.)