REQ A

• 1

  Record the sale.

• 2

  Record entry for forward contract entered into by Hanks Company.

• 3

  Record the entry for changes in the exchange rate.

• 4

  Record gain or loss on forward contract.

• 5

  Record the entry for changes in the exchange rate.

• 6

  Record gain or loss on forward contract.

• 7

  Record the receipt of LCUs.

• 8

  Record settlement of forward contract.

REQ B

• Record entry for foreign currency firm commitment entered into by Hanks Company.

• 2

  Record entry for forward contract entered into by Hanks Company.

• 3

  Record gain or loss on forward contract.

• 4

  Record gain or loss on firm commitment.

• 5

  Record gain or loss on forward contract.

• 6

  Record gain or loss on firm commitment.

• 7

  Record sale of LCU by Hanks Company.

• 8

  Record settlement of forward contract.

• 9

  Record entry to close the firm commitment.

On October 1, 2017, Sharp Company (based in Denver, Colorado) entered into a forward contract to sell 180.000 rubles in four months (on January 31, 2018) and receive $84.600 in U.S. dollars. Exchange rates for the ruble follow: Date October 1, 2017 December 31, 2017 January 31, 2018 Spot Rate $ 0.43 0.46 0.48 Forward Rate (to January 31, 2018) $ 0.47 0.49 N/A Sharp's incremental borrowing rate is 12 percent. The present value factor for one month at an annual interest rate of 12 percent (1 percent per month) is 0.9901. Sharp must close its books and prepare financial statements on December 31. e. Prepare journal entries, assuming that Sharp entered into the forward contract as a fair value hedge of a 180.000 ruble receivable arising from a sale made on October 1, 2017. Include entries for both the sale and the forward contract. b. Prepare journal entries, assuming that Sharp entered into the forward contract as a fair value hedge of a firm commitment related to a 180.000 ruble sale that will be made on January 31, 2018. Include entries for both the firm commitment and the forward contract. The fair value of the firm commitment is measured by referring to changes in the forward rate. Complete this question by entering your answers in the tabs below. Required A Required B Prepare journal entries, assuming that Sharp entered into the forward contract as a fair value hedge of a firm commitment related to a 180,000 ruble sale that will be made on January 31, 2018. Include entries for both the firm commitment and the forward contract. The fair value of the firm commitment is measured by referring to changes in the forward rate. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to 2 decimal places.) Show less