On December 1,2015,Mackenzie Mann Ltd.entered into a binding agreement to buy inventory costing US$300,000 for delivery on February 16,2016.Terms of the sale were COD (cash on delivery).Mackenzie Mann,which has a December 31 year-end,decided to hedge its foreign exchange risk and entered into a forward agreement to receive US$300,000 at that time.Mackenzie Mann designated the forward a fair value hedge.Pertinent exchange rates follow:

Required:
Record the required journal entries for December 1,December 31,and February 16 using the net method.If no entries are required,state "no entry required" and indicate why.

Question

On December 1,2015,Mackenzie Mann Ltd.entered into a binding agreement to buy inventory costing US$300,000 for delivery on February 16,2016.Terms of the sale were COD (cash on delivery).Mackenzie Mann,which has a December 31 year-end,decided to hedge its foreign exchange risk and entered into a forward agreement to receive US$300,000 at that time.Mackenzie Mann designated the forward a fair value hedge.Pertinent exchange rates follow:
  
Required:
Record the required journal entries for December 1,December 31,and February 16 using the net method.If no entries are required,state "no entry required" and indicate why.

Quizplus · Accepted Answer

The Answer of On December 1,2015,Mackenzie Mann Ltd.entered into a binding agreement to buy inventory costing US$300,000 for delivery on February 16,2016.Terms of the sale were COD (cash on delivery).Mackenzie Mann,which has a December 31 year-end,decided to hedge its foreign exchange risk and entered into a forward agreement to receive US$300,000 at that time.Mackenzie Mann designated the forward a fair value hedge.Pertinent exchange rates follow:
  
Required:
Record the required journal entries for December 1,December 31,and February 16 using the net method.If no entries are required,state "no entry required" and indicate why.