XYZ Corporation sold machinery to a Company for 200,000 kroner (SKr) on April 20, Year 1 with settlement to be in 60 days. On that same date, XYZ entered into a 60-day forward contract to sell 200,000 SKr at a forward rate of 1 SKr = $0.167 to manage its exposed foreign currency receivable. The forward contract is NOT designated as a hedge. The spot rates were as follows: April 20, Year 1: 1 SKr = $0.170; June 19, Year 1: 1 SKr = $0.165.

1. Record all necessary journal entries required related to the foreign transaction and the forward contract on the books of XYZ Corporation during the 60-day period, including an explanation for each journal entry and the basis of each calculation required for each journal entry, under the US GAAP.
2. Compare the effects on net income of XYZs use of the forward exchange contract vs. the effect if XYZ had not used a forward exchange contract under the US GAAP. Did Scandinavia save money by using the forward exchange contract or lose money as a result of using the forward exchange contract? How much money did XYZ save or lose? Make sure you show the basis of your calculations (using the forward contract vs. not using the forward contract) in your submission.