Problem

I. White Inc. agreed to buy some construction material from a seller in Japan $$ on August $1,$

Year$-4,$ for a price of $650,000$ Japanese Yen $(),$ when the spot rate was $1=$$$0\mathrm{.}074.$

White took delivery of the materials on November $1,$ Year$-4,$ when the spot rate was $1=$

$$0\mathrm{.}080.$ White was required to make the payment by March $1,$ Year$-5.$

White's year$-$end is December $31$ and on this date the spot rate was $1=$$$0\mathrm{.}082.$ White made

the payment on March $1,$ Year$-5,$ when the spot rate was $1=$$$0\mathrm{.}071.$

Required

Prepare all journal entries for Year$-4,$ connected to this purchase transaction.

Prepare a balance sheet extract at December $31,$ Year$-4,$ to show the accounting of the

transactions.

II$.$ In addition to the information above, on November $2,$ Year$-4,$ white decided to buy a Forward

Contract from a bank at the $120-$day forward rate of $$0\mathrm{.}086,$ when the spot rate was still $1=$

$$0\mathrm{.}080.$ On December $31,$ Year$-4,$ the forward rate with maturity on March $1,$ Year$-5$ was $1=$

$$0\mathrm{.}084.$ Hedge accounting was not applied.

Prepare all journal entries connected to this purchase transaction for Year$-4$ and Year$-5.$