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Required: On May 12, Globe signed a contract to purchase toys made in Taiwan for 80,000 Taiwan dollars (NT$). The toys were to be delivered

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On May 12, Globe signed a contract to purchase toys made in Taiwan for 80,000 Taiwan dollars (NT$). The toys were to be delivered 80 days later on August 1, and payment was due on September 9, which was 40 days after delivery. On May 12, Globe also entered into a 120-day undesignated forward contract to buy NT$80,000 at a forward rate of NT$1 = $0.0376. On August 1, the forward rate for a September 9 exchange is NT$1 = $0.0378. The spot rates were as follows:

May 12 NT$1 = $0.0370
August 1 NT$1 = 0.0375
September 9 NT$1 = 0.0372

Prepare all necessary journal entries for Globe to account for the foreign transactions, including the sales and purchases of inventory, forward contracts, and settlements.

Record a 120-day forward contract signed to hedge a foreign currency commitment.

2

Record the loss on the financial statement aspect of the firm commitment.

3

Record the receipt of goods and adjustment of the inventory cost by deferrals.

4

Record the revaluation of the foreign currency receivable to the fair value.

5

Record the revaluation of the foreign currency payable.

6

Record the delivery of U.S. dollars to a foreign exchange broker.

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