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On October 1 , 2 0 2 3 , Mertag Company ( a U . S . - based company ) recelves an order from
On October Mertag Company a USbased company recelves an order from a customer in Poland to dellver goods on January for a price of Polish zlotys PLN Mertag enters into a forward contract on October to sell PLN in four months on January US dollarPolish zloty exchange rates are as follows:
tableDateSpot Rate,tableForward Rate toJanuary October $$December January NA
Mertag designates the forward contract as a falr 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 financlal statements on December Discounting to present value can be Ignored.
Required:
a Prepare Journal entrles for the forelgn 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.
Answer is complete but not entirely correct.
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 transactionevent select No Journal Entry Required" in the first account field.
tableNoDate,General Journal,Debit,CreditNo Journal Entry Required,ONo Journal Entry Required,theta Foreign Exchange Gain or Loss,theta theta Forward Contract,theta Firm Commitment,Foreign Exchange Gain or Loss,theta @Forward Contract,xForeign Exchange Gain or Loss,theta Foreign Exchange Gain or Loss,xFirm Commitment,Foreign Currency PLNSales,theta Cash,times Forward Contract,theta Theta Foreign Currency PLN
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