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On October 1, 2018, 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, 2018, a forward exchange contract was acquired whereby Jarvis Co. was to pay 100,000 LCU in four months (on February 1, 2019) and receive $78,000 in U.S. dollars. The spot and forward rates for the LCU were as follows:

Date	Rate Description	Exchange Rate
October 1, 2018	Spot rate:	$.83 = 1 LCU
December 31, 2018	Spot rate:	$.85 = 1 LCU
	1-Month Forward Rate	$.80 = 1 LCU
February 1, 2019	Spot rate:	$.86 = 1 LCU

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.

Please provide solution with answers