On October $1,2023,$ Mertag Company $($a U$.$S$.-$based company$)$ receives an order from a customer in Poland to deliver goods on

January $31,2024,$ for a price of $1,032,000$ Polish zlotys $($PLN$).$ Mertag enters into a forward contract on October $1,2023,$ to sell PLN

$1,032,000$ in four months $($on January $31,2024).$ U$.$S$.$ dollar$-$Polish zloty exchange rates are as follows:

Mertag designates the forward contract as a fair value hedge of a foreign currency firm commitment. The fair value of the firm

commitment is measured by referring to changes in the forward rate and, therefore, forward points are included in assessing hedge

effectiveness. Mertag must close its books and prepare financial statements on December $31.$ Discounting to present value can be

ignored.

Required:

a$.$ Prepare journal entries for the foreign currency forward contract, foreign currency firm commitment, and export sale.

b$.$ Determine the net benefit, if any, realized by Mertag from entering into the forward contract.

Complete this question by entering your answers in the tabs below.

Prepare journal entries for the foreign currency forward contract, foreign currency firm commitment, and export sale.

Note: Do not round intermediate calculations. If no entry is required for a transaction$/$event$,$ select $"$No Journal Entry Required" in the

first account field.

Journal entry worksheet

Record the sales agreement.

Note: Enter debits before credits.