On November 1, 2013, Ironside Company (a U.S. manufacturer) sold an airplane for 1 million New Zealand dollars (NZ$) to a New Zealand company, Wellington Corporation. Ironside will receive payment on January 30, 2014 in New Zealand dollars. In order to hedge the accounts receivable position, Ironside entered into a 90-day forward contract on November 1, 2013 to sell 1 million New Zealand dollars. On November 1, 2013, the forward rate is US$0.79 per New Zealand dollar. The forward contract will be settled net. This is a fair value hedge. Ignore the time value of money.
The relevant exchange rates per New Zealand dollar:
Required:
Record the journal entries that Stateside would need to prepare at November 1, 2013, December 31, 2013 and January 30, 2014. December 31 is the fiscal year end.

Question

On November 1, 2013, Ironside Company (a U.S. manufacturer) sold an airplane for 1 million New Zealand dollars (NZ$) to a New Zealand company, Wellington Corporation. Ironside will receive payment on January 30, 2014 in New Zealand dollars. In order to hedge the accounts receivable position, Ironside entered into a 90-day forward contract on November 1, 2013 to sell 1 million New Zealand dollars. On November 1, 2013, the forward rate is US$0.79 per New Zealand dollar. The forward contract will be settled net. This is a fair value hedge. Ignore the time value of money.
The relevant exchange rates per New Zealand dollar:
  Required:
Record the journal entries that Stateside would need to prepare at November 1, 2013, December 31, 2013 and January 30, 2014. December 31 is the fiscal year end.

Quizplus · Accepted Answer

The Answer of On November 1, 2013, Ironside Company (a U.S. manufacturer) sold an airplane for 1 million New Zealand dollars (NZ$) to a New Zealand company, Wellington Corporation. Ironside will receive payment on January 30, 2014 in New Zealand dollars. In order to hedge the accounts receivable position, Ironside entered into a 90-day forward contract on November 1, 2013 to sell 1 million New Zealand dollars. On November 1, 2013, the forward rate is US$0.79 per New Zealand dollar. The forward contract will be settled net. This is a fair value hedge. Ignore the time value of money.
The relevant exchange rates per New Zealand dollar:
  Required:
Record the journal entries that Stateside would need to prepare at November 1, 2013, December 31, 2013 and January 30, 2014. December 31 is the fiscal year end.

On November 1, 2013, Ironside Company (A U