On October 15, our company has executed a purchase order for new equipment to be purchased from a supplier in Denmark for a purchase price of DKK 1.2 million.The equipment is deliverable on March 31. In order to hedge the commitment to pay DKK1.2 million, we enter into a forward exchange contract on October 15 to receive DKK1.8 million on March 31 at an exchange rate of $0.17: DKK1.Assume the following exchange gates:

Date Spot Rates Forward Rates

October 15 $0.15:DKK1 $0.17:DKK1

December 31 $0.16:DKK1 $0.18:DKK1

March 31 $0.20:DKK1 n/a

Required:Prepare the journal entries to record the following:

Execution of the purchase order and forward contract

Adjusting entries at December 31

Receipt of equipment and payment to equipment supplier on March 31.