Prepare the journal entries for a cash flow hedge.

ACT506 Critical Thinking Assignment Option #2 Journal Entries for Hedging a Forecasted Foreign Currency Transaction: A Foreign Currency Cash Value Hedge Information: 1). 2). 3). 4). 5). 6). Push Corp operates in the United States. It uses the Euro for local currency transactions. On Oct 01, 20x7, Push Corp orders inventory items from German Corporation. Within 30 days, the delivery of the German inventory parts will take place, Nov 1, 20x7. The contract price is Euro 5,000 to be paid in 180 days, 6 months. On Oct 01, 20x7, Push Corp hedges its foreign currency payable commitment with a forward exchange contract to re The purchase of inventory is forecasted for Nov 20x7, but this is not a binding agreement. 7). Relevant exchange Rates 10/1/20x7 Spot Rate 1.1 Forward Exchange Rate 1.25 210 days 11/1/20x7 1.15 1.3 180 days 12/31/20x7 1.2 1.35 120 days 4/28/20x8 1.15 0 0 ward exchange contract to receive Euro 5,000 in 210 days (30+180). Journal Entries for Hedging a Forecasted Foreign Currency Transaction: A Foreign Currency Cash Value Hedge Journal Entries: A OCT 01 20x7 Foreign Currency Receivable from Exchange Broker Dollars Payable to Exchange Broker($) (Record signed forward exchange contract for receipt of 5,000 Euro in 210 days) B. 11/1/20x7 Foreign Currency Receivable (EURO) Other Comprehensive Income (Record adjustment of forward contract to fair Value) 11/1/20x7 Inventory Accounts Payable (Euro) 12/31/20x7 Foreign Currency Receivable (EURO) Foreign Currency Gain 12/31/20x7 Foreign Currency Loss Accounts Payable 4/28/20x8 Foreign Currency loss Foreign Currency Receivable Accts Payable Foreign Currency Gain 4/28/20x8 Dollars Payable to Broker Cash Foreign Currency Units Foreign Currency Rec Acct Payable Foreign Currency Units Other Comprehensive Income Cost of Goods Sold Cost of Good Sold Inventory ash Value Hedge uro in 210 days) Debit Credit