On December 1, 2012, Sycamore Company acquired a 90-day speculative forward contract to sell 120,000 British pounds (£) at a forward rate of £1 = C$1.61. The rates are as follows:

Required
(a) Prepare the journal entries for the period of December 1, 2012, through March 1, 2013.
(b) Show the effects of this speculation on both the 2012 and 2013 comprehensive income statements.

Transcribed Image Text:

Forward Rate For March 1 Date December 1, 2012 £1-C$1.61 £1-C$1.61 December 31, 2012 £ C$1.65 £1 C$1.62 March 1, 2013 Spot rate £1-C$1.585 £1-C$1.585