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Starflyer Inc., a Canadian public company, entered into the following transactions late in 20X6: Transaction #1: On October 15, Starflyer Inc. purchased inventory from a
Starflyer Inc., a Canadian public company, entered into the following transactions late in 20X6: Transaction #1: On October 15, Starflyer Inc. purchased inventory from a Mexican supplier for 800,000 pesos (Ps). On the same day, Starflyer Inc. entered into a forward contract for Ps 800,000 at the 60-day forward rate. The Mexican supplier was paid in full on December 15, 20X6. Transaction #2: On October 15, 20X6, Starflyer Inc. sold merchandise to a company in Sweden for 6,000,000 kronor. The amount was to be paid in 90 days. Starflyer Inc. hedged the receivable for the 90-day period with a forward contract. . Starflyer Inc. has a year-end of December 31. Exchange rates were as follows during this period of time: = = October 15, 20X6 October 15, 20X6, forward 60-day rate October 15, 20X6, forward 90-day rate December 15, 20X6 December 31, 20X6 December 31, 20X6, forward rate to January 15, 20X7 January 15, 20X7 Ps1 = $0.3960 Ps1 = $0.3990 Ps1 = $0.3970 Ps1 = $0.3880 Ps1 = = $0.3810 Ps1 = $0.3920 Ps1 = $0.3920 1 Kronor = $0.1250 1 Kronor = $0.1078 1 Kronor = $0.1080 1 Kronor = $0.1094 I Kronor = $0.1099 I Kronor = $0.1075 I Kronor = $0.1058 = = = The company uses the net method to record hedging transactions. Required: Prepare the journal entries that Starflyer Inc. should make to record the events described above
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