Question
On October 1, 2020, Mertag Company (a U.S.-based company) receives an order from a customer in Poland to deliver goods on January 31, 2021, for
On October 1, 2020, Mertag Company (a U.S.-based company) receives an order from a customer in Poland to deliver goods on January 31, 2021, for a price of 1,000,000 Polish zlotys (PLN). Mertag enters into a forward contract on October 1, 2020, to sell PLN 1,000,000 in four months (on January 31, 2021). U.S. dollarPolish zloty exchange rates are as follows:
Record the sales agreement. | |
Record entry for forward contract entered into by Mertag Company. | |
Record the forward contract and recognize the change in fair value. | |
Record the forward contract and recognize the change in fair value. | |
Record the entry to adjust the fair value of the forward contract | |
Record the entry to adjust the fair value of the firm commitment | |
Record the sale and receipt of PLN | |
Record settlement of forward contract | |
Record entry to close the firm commitment |
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