On May 1, 2020, Smart Company planned to purchase inventory at the beginning of July 2020, at a cost of 300,000 FC. Due to its concern about the weakening dollar, the company bought a contract on May 1 for the delivery of 300,000 FC on July 1, 2020. Management designated the forward contact as a cash flow hedge and decided that the time value of the forward contract, represented by the contract premium or discount, would be excluded from the assessment of hedge effectiveness and amortized over the life of the contract on a straight-line basis. On July 1, Smart purchased the inventory at a cost of 303,000 FC. On July 19, the company sold the inventory for $250,000. Selected spot and forward rates are as follows: Spot rate $ .495 May 1 May 31 July 1 Forward Rate $ .505 .510 .520 .505 .520 Required: Assuming the company has a May 31 year-end, prepare the necessary journal entries to record the above transactions. Changes in the forward rates are to be discounted at a 6% rate. On May 1, 2020, Smart Company planned to purchase inventory at the beginning of July 2020, at a cost of 300,000 FC. Due to its concern about the weakening dollar, the company bought a contract on May 1 for the delivery of 300,000 FC on July 1, 2020. Management designated the forward contact as a cash flow hedge and decided that the time value of the forward contract, represented by the contract premium or discount, would be excluded from the assessment of hedge effectiveness and amortized over the life of the contract on a straight-line basis. On July 1, Smart purchased the inventory at a cost of 303,000 FC. On July 19, the company sold the inventory for $250,000. Selected spot and forward rates are as follows: Spot rate $ .495 May 1 May 31 July 1 Forward Rate $ .505 .510 .520 .505 .520 Required: Assuming the company has a May 31 year-end, prepare the necessary journal entries to record the above transactions. Changes in the forward rates are to be discounted at a 6% rate