Imperial Corp., a U.S. corporation, entered into a contract on November 1, 2016, to sell two machines to Crown Company, for 95,000 foreign currency units (FCU). The machines were to be delivered and the amount collected on March 1, 2017.
In order to hedge its commitment, Imperial entered into a forward contract for 95,000 FCU delivery on March 1, 2017. The forward contract met all conditions for hedging an identifiable foreign currency commitment.
Selected exchange rates for FCU at various dates were as follows: Required:
Prepare all journal entries relative to the above on the books of Imperial Corp. on the following dates:
1. November 1, 2016.
2. Year-end adjustments on December 31, 2016.
3. March 1, 2017. (Include all adjustments related to the forward contract.)

Question

Imperial Corp., a U.S. corporation, entered into a contract on November 1, 2016, to sell two machines to Crown Company, for 95,000 foreign currency units (FCU). The machines were to be delivered and the amount collected on March 1, 2017.
In order to hedge its commitment, Imperial entered into a forward contract for 95,000 FCU delivery on March 1, 2017. The forward contract met all conditions for hedging an identifiable foreign currency commitment.
Selected exchange rates for FCU at various dates were as follows:  Required:
Prepare all journal entries relative to the above on the books of Imperial Corp. on the following dates:
1. November 1, 2016.
2. Year-end adjustments on December 31, 2016.
3. March 1, 2017. (Include all adjustments related to the forward contract.)

Quizplus · Accepted Answer

The Answer of Imperial Corp., a U.S. corporation, entered into a contract on November 1, 2016, to sell two machines to Crown Company, for 95,000 foreign currency units (FCU). The machines were to be delivered and the amount collected on March 1, 2017.
In order to hedge its commitment, Imperial entered into a forward contract for 95,000 FCU delivery on March 1, 2017. The forward contract met all conditions for hedging an identifiable foreign currency commitment.
Selected exchange rates for FCU at various dates were as follows:  Required:
Prepare all journal entries relative to the above on the books of Imperial Corp. on the following dates:
1. November 1, 2016.
2. Year-end adjustments on December 31, 2016.
3. March 1, 2017. (Include all adjustments related to the forward contract.)