On October 1, Year 6, Versatile Company contracted to sell merchandise to a customer in Switzerland at a selling price of CHF574,000. 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 CHF574,000 on January 31, Year 7, at a rate of CHF1 = $1.28. Versatiles year-end is December 31.

The merchandise was delivered on January 31, Year 7, and CHF574,000 were received and delivered to the bank.

Exchange rates were as follows:

	Spot Rates	Forward Rates**
October 1, Year 6	CHF1 = $1.26	CHF1 = $1.28
December 31, Year 6	CHF1 = $1.29	CHF1 = $1.30
January 31, Year 7	CHF1 = $1.27	CHF1 = $1.27

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

Required:

(a) Prepare the journal entries (using net method) 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.)

Date	General Journal	Debit	Credit
October 1, Year 6	(Click to select) Equipment Commitment receivable Payable to bank No journal entry required Exchange loss Receivable from bank Cash Land Other comprehensive income
	(Click to select) Commitment receivable Receivable from bank Exchange loss Cash Land Other comprehensive income No journal entry required Equipment Forward contract
	Record the forward contract.
December 31, Year 6	(Click to select) No journal entry required Exchange loss Commitment receivable Forward contract Land Other comprehensive income Receivable from bank Cash Equipment
	(Click to select) Loan payable Sales No journal entry required Exchange gain Forward contract Interest receivable Notes payable Bills payable Accounts payable
	Record the adjustment of forward contract to forward rate.
January 31, Year 7	(Click to select) Receivable from bank Payable to bank No journal entry required Exchange loss Commitment receivable Land Equipment Other comprehensive income Cash (CHF)
	(Click to select) Interest receivable Loan payable No journal entry required Notes payable Sales Bills payable Exchange gain Payable to bank Accounts payable
	Record the sales.
	(Click to select) No journal entry required Cash Exchange loss Other comprehensive income Commitment receivable Land Equipment Forward contract Receivable from bank
	(Click to select) Accounts payable Loan payable Other comprehensive income No journal entry required Bills payable Exchange gain Interest receivable Notes payable Sales
	Record the adjustment of forward contract to forward rate.
	(Click to select) Land Payable to bank Receivable from bank Exchange loss Other comprehensive income Equipment Cash Commitment receivable No journal entry required
	(Click to select) No journal entry required Exchange gain Payable to bank Loan payable Sales Notes payable Accounts payable Bills payable Interest receivable
	Record the adjustment of other comprehensive income.
	(Click to select) No journal entry required Receivable from bank Commitment receivable Equipment Payable to bank Cash Other comprehensive income Exchange loss Land
	(Click to select) No journal entry required Forward contract Interest receivable Exchange gain Accounts payable Sales Bills payable Loan payable Notes payable
	(Click to select) Sales Accounts payable Notes payable Payable to bank Cash (CHF) Loan payable No journal entry required Interest receivable Bills payable
	Record the forward contract with bank.

(b) Prepare a partial trial balance of the accounts used as at December 31, Year 6. (Leave no cells blank - be certain to enter "0" wherever required. Omit $ sign in your response.)

Partial trial balance
December 31, Year 6
Account	Debit	Credit
(Click to select) Notes payable Exchange gain Sales Interest receivable Loan payable Bills payable Forward contract Accounts payable	$	$
(Click to select) Equipment Exchange loss Accounts receivable Inventory Land Receivable from bank Purchase Other comprehensive income	$	$