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PROBLEM 1 On October 17, 2017, KENT Inc. purchased from a Thailand firm an inventory costing 10,000 baht. Payment is due on January 15, 2018.

PROBLEM 1

On October 17, 2017, KENT Inc. purchased from a Thailand firm an inventory costing 10,000 baht. Payment is due on January 15, 2018. Also on October 17, KENT entered into a foreign exchange forward to buy 10,000 baht on January 15, 2018.

10/17/17 12/31/17 1/15/18

Spot rate P1.30 P1.42 P1.40

Forward rate P1.30 P1.42 P1.40

1. The December 31, 2017 profit and loss statement, foreign exchange gain or loss due to hedged item amounted to:

2. The December 31, 2017 profit and loss statement, foreign exchange gain or loss due to hedging instrument-forward contract:

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