On December 15,2017 Welders Inc.signed a contract to purchase 200,000 kg of copper pipes to be received on February 15,2018.Terms of sale were COD (cash on delivery).Welders,which has a December 31 year-end,entered into a two months forward agreement to purchase the copper to mitigate its price change risk.Welders designated the forward as a cash flow hedge.Pertinent commodity prices follow:
Required:
Record the required journal entries for December 15,December 31,and February 15 using the net method.If no entries are required,state "no entry required" and indicate why.

Question

On December 15,2017 Welders Inc.signed a contract to purchase 200,000 kg of copper pipes to be received on February 15,2018.Terms of sale were COD (cash on delivery).Welders,which has a December 31 year-end,entered into a two months forward agreement to purchase the copper to mitigate its price change risk.Welders designated the forward as a cash flow hedge.Pertinent commodity prices follow:
  Required:
Record the required journal entries for December 15,December 31,and February 15 using the net method.If no entries are required,state "no entry required" and indicate why.

Quizplus · Accepted Answer

The Answer of On December 15,2017 Welders Inc.signed a contract to purchase 200,000 kg of copper pipes to be received on February 15,2018.Terms of sale were COD (cash on delivery).Welders,which has a December 31 year-end,entered into a two months forward agreement to purchase the copper to mitigate its price change risk.Welders designated the forward as a cash flow hedge.Pertinent commodity prices follow:
  Required:
Record the required journal entries for December 15,December 31,and February 15 using the net method.If no entries are required,state "no entry required" and indicate why.