On May 15, International Exports Ltd. (IEL) shipped a large order to a customer in Switzerland (per the terms of the sale, title to the product passed to the customer when shipped from Calgary). The currency of Switzerland was the Swiss Franc (CHF). The total order was CHF 700,000, payable to IEL on June 15. Immediately upon shipping the order, IEL entered into a forwarding contract with its bank to sell CHF 700,000 to the bank on June 15, the day that IEL expected to receive payment from its customer in Switzerland. IEL controller chose to use hedge accounting for this transaction, and the companys year-end was May 31.

Foreign exchange rates were as follows: Date Spot Rate Forward Rate May 15 1 CHF = CAD 1.5364 1 CHF = CAD 1.4972 May 31 1 CHF = CAD 1.4382 1 CHF = CAD 1.3994 June 15 1 CHF = CAD 1.5188 1 CHF = CAD 1.5188

Prepare all the journal entries required to record the fair value hedge on the books of International Exports Ltd.