On October 1, 2017, Sharp Company (based in Denver, Colorado) entered into a forward contract to sell 270.000 rubles in four months on January 31, 2018) and receive $151,200 in U.S. dollars. Exchange rates for the ruble follow: Forward Rate Spot Rate (to January 31, 2018) Date October 1, 2017 December 31, 2017 anuary 31, 2018 0.52 0.55 0.57 $0.56 0.58 N/A Sharp's incremental borrowing rate is 12 percent. The present value factor for one month at an annual interest rate of 12 percent (1 percent per month) is 0.9901. Sharp must close its books and prepare financial statements on December 31. a. Prepare journal entries, assuming that Sharp entered into the forward contract as a fair value hedge of a 270,000 ruble receivable arising from a sale made on October 1, 2017. Include entries for both the sale and the forward contract. b. Prepare journal entries, assuming that Sharp entered into the forward contract as a fair value hedge of a firm commitment related to a 270,000 ruble sale that will be made on January 31, 2018. Include entries for both the firm commitment and the forward contract. The fair value of the firm commitment is measured by referring to changes in the forward rate General Journal Debit 140,400.00 Accounts receivable (ruble) 1001 140,400.00 1001 No journal entry required 8,100.00 Accounts receivable (ruble) Foreign exchange gain 8.100.00 5,348.54 Loss on forward contract 5346.54 Forward contract Accounts receivable (ruble) Foreign exchange gain 5.400.000 01/31 5,400.00 5,348.54 01/31 Forward contract 2.848.54 Gain on forward contract 153,800.00 Foreign currency (ruble 01/31 153,900.00 Accounts receivable (ruble) 01/31 Cash 151.200.00 2.700.000 Forward contract 153.900.0012 Foreign currency (ruble) General Journal No journal entry required No journal entry required Loss on forward contract Forward contract Gain on firm comittment 01/31 Forward contract Gain on forward contract 01/31 Loss on firm comittment Firm commitment 153,900.00 01/31 Foreign currency (ruble) 153.00.00 Sales 151,200.00 2,700.00 01/31 Forward contract 153,00.00 Foreign currency (ruble) 2,700.00 01/31 Adjustment to net income 2,700.00