On September 1, 2019 Philips corporation sold merchandise to a foreign customer for 300,000 Brazilian real with payment to be received on March 1, 2020. At the date of sale, Philips entered into a six month forward contract to sell 300,000 reals. The forward contract was properly designated as a fair value hedge. The following exchange rates apply:

DateSpot rateForward rate

(to March 1, 2020)

September 1, 2019$0.46$ 0.49

December 31, 20190.500.52

March 1, 20200.54

Philips' incremental borrowing rate is 12%. The present value factorat an annual interest rate of 12% is .9610. What journal entry should Philips prepare to record the value of the forward contract on December 31, 2019?

Multiple Choice

• Accumulated Other Comprehensive Income (AOCI)$8,649
• Forward contract$8,649
• Loss on Forward contract$8,649
• Forward contract$8,649
• Forward Contract$8,649
• Gain on Forward contract$8,649
• Loss on Forward contract$9,000
• Forward contract$9,000
• Forward Contract$8,649
• Accumulated Other Comprehensive Income (AOCI)$8,649