On October 1, Year 6, Versatile Company contracted to sell merchandise to a customer in Switzerland at a selling price of CHF300,000. The contract called for the merchandise to be delivered to the customer on January 31, Year 7, with payment due on delivery. On October 1, Year 6, Versatile arranged a forward contract to deliver CHF300,000 on January 31, Year 7, at a rate of CHF1 = $1.14. Versatile's year-end is December 31.

The merchandise was delivered on January 31, Year 7, and CHF300,000 were received and delivered to the bank.

Exchange rates were as follows:

Spot RatesForward Rates**October 1, Year 6CHF1 = $1.12CHF1 = $1.14December 31, Year 6CHF1 = $1.15CHF1 = $1.16January 31, Year 7CHF1 = $1.13CHF1 = $1.13

**For contracts expiring on January 31, Year 7.

Required:

(a)Prepare the journal entries that Versatile should make to record the events described assuming that the forward contract is designated as a cash flow hedge.(In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank - be certain to enter "0" wherever required.)

(b)Preparea partial trial balance of the accounts used as at December 31, Year 6, and indicate how each would appear on the company's financial statements.(Leave no cells blank - be certain to enter "0" wherever required. Omit $ sign in your response.)

Trial BalanceDecember 31, Year 6

(c)Prepare the journal entries that Versatile should make to record the events described, assuming that the forward contract is designated as a fair value hedge.(In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank - be certain to enter "0" wherever required.)