Our firm sold equipment to a company in France for 450,000 on December 1, Year 6. Our year end is December 31, and the receivable is due on February 28, Year 7. On December 1, Year 6, we entered into a forward exchange contract with the bank to provide them with 450,000 on February 28, Year 7 in return for Canadian dollars at a forward rate of Euro 1 = CDN $1.44. This is classified as a fair value hedge.

The following rates were in effect:

Forward Rates: December 1, Year 6; 90-day forward rate1 = CDN$ 1.44December 31, Year 6; 60-day forward rate1 = CDN$ 1.47Spot rates: December 1, Year 61 = CDN$ 1.39December 31, Year 61 = CDN$ 1.42February 28, Year 71 = CDN$ 1.46

Required:

Provide all of the necessary journal entries to record both the account payable and the hedge. Use standard journal entry format.