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please make sure it is using Cash Flow Hedge! 1) On October 1, 2013, Jarvis Co. sold inventory to a customer in a foreign country,

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please make sure it is using Cash Flow Hedge!
1) On October 1, 2013, Jarvis Co. sold inventory to a customer in a foreign country, denominated in 100,000 local currency units (LCU). Collection is expected in four months. On October 1, 2013, a forward exchange contract was acquired whereby Jarvis Co. was to pay 100,000 LCU in four months (on February 1, 2014) and receive $78,000 in U.S. dollars. The spot and forward rates for the LCU were as follows: Rate Description Date October 1, 2013 December 31, 2013 Spot Rate Spot Rate 1-Month Forward Rate Spot Rate Exchange Rate $.83 = 1 LCU $.85 = 1 LCU $.80 = 1 LCU $.86 = 1 LCU February 1, 2014 The company's borrowing rate is 12%. The present value factor for one month is 9901. Any discount or premium on the contract is amortized using the straight-line method. Assuming this is a cash flow hedge; prepare journal entries for this sales transaction and forward contract

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