Manitoba Exporters Inc. (MEI) sells Inuit carvings to countries throughout the world. On December 1, Year...

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Manitoba Exporters Inc. (MEI) sells Inuit carvings to countries throughout the world. On December 1, Year 5, MEI sold 10,000 carvings to a wholesaler in a foreign country at a selling price of 800,000 foreign currency units (FC) when the spot rate was FC1 = $0.701. The invoice required the foreign wholesaler to remit by April 1, Year 6. On December 3, Year 5, MEI entered into a forward contract with the Royal Bank to sell FC800,000 at the 120-day forward rate of FC1 $0.741 when the spot rate was still FC1 $0.701. Hedge accounting is not applied. The fiscal year-end of MEI is December 31, and on this date the spot rate was FC1 $0.737 and the forward rate was FC1 = $0.752. The payment from the foreign customer was received on April 1, Year 6, when the spot rate was FC1-$0.802. Required: (a) Prepare the journal entries to record (In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank-be certain to enter "0" wherever required.) (1) The sale and forward contracts on December 1 and 3, Year 5 Date December 1, Year 5 General Journal Accounts receivable Sales Record the sales. Debit Credit 560800 560800 December 3, Year 5 No journal entry required No journal entry require v Record the forward contract. (i) Any adjustments required on December 31 Date General Journal December 31, Year 5 Accounts receivable Exchange gain Debit 19720 Credit 19720 Record to adjust the accounts receivable to closing exchange rate. No journal entry required No journal entry require Record to adjust the forward contract to closing exchange rate. () The cash received and settlement a (ii) The cash received and settlement of the contracts in Year 6 Date General Journal April 1, Year 6 Accounts receivable Exchange gain Debit Record to adjust the accounts receivable to the spot rate. Exchange loss Forward contract Record to adjust the forward contract to the spot rate. Cash (FC) Accounts receivable Record the receipt of cash. (Click to select) V (Click to select) (Click to select) Record the cash received from bank. Credit (b) Now assume that a discount rate of 6% per annum, or 0.5% per month, is applied when determining the fair value of the forward contract at December 31, Year 5. Prepare the journal entries to record (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount. In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank - be certain to enter "0" wherever required.) (1) The sale and forward contracts on December 1 and 3, Year 5 Date December 1, Year 5 General Journal Accounts receivable Sales Record the sales. Debit Credit 560800 560800 December 3, Year 5 No journal entry required No journal entry require Record the forward contract. (i) Any adjustments required on December 31 Date December 31, Year 5 General Journal Accounts receivable Exchange gain V Debit Credit Record to adjust the accounts receivable to closing exchange rate. Exchange loss Forward contract Record to adjust the forward contract to closing exchange rate. (i) The cash received and settlement of the contracts in Year 6 Date April 1, Year 6 General Journal Accounts receivable Exchange gain Debit Credit Record to adjust the accounts receivable to the spot rate. Exchange loss Forward contract Record to adjust the forward contract to the spot rate. Cash (FC) Accounts receivable Record the receipt of cash. Cash Forward contract Cash (FC) Record the cash received from bank. Manitoba Exporters Inc. (MEI) sells Inuit carvings to countries throughout the world. On December 1, Year 5, MEI sold 10,000 carvings to a wholesaler in a foreign country at a selling price of 800,000 foreign currency units (FC) when the spot rate was FC1 = $0.701. The invoice required the foreign wholesaler to remit by April 1, Year 6. On December 3, Year 5, MEI entered into a forward contract with the Royal Bank to sell FC800,000 at the 120-day forward rate of FC1 $0.741 when the spot rate was still FC1 $0.701. Hedge accounting is not applied. The fiscal year-end of MEI is December 31, and on this date the spot rate was FC1 $0.737 and the forward rate was FC1 = $0.752. The payment from the foreign customer was received on April 1, Year 6, when the spot rate was FC1-$0.802. Required: (a) Prepare the journal entries to record (In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank-be certain to enter "0" wherever required.) (1) The sale and forward contracts on December 1 and 3, Year 5 Date December 1, Year 5 General Journal Accounts receivable Sales Record the sales. Debit Credit 560800 560800 December 3, Year 5 No journal entry required No journal entry require v Record the forward contract. (i) Any adjustments required on December 31 Date General Journal December 31, Year 5 Accounts receivable Exchange gain Debit 19720 Credit 19720 Record to adjust the accounts receivable to closing exchange rate. No journal entry required No journal entry require Record to adjust the forward contract to closing exchange rate. () The cash received and settlement a (ii) The cash received and settlement of the contracts in Year 6 Date General Journal April 1, Year 6 Accounts receivable Exchange gain Debit Record to adjust the accounts receivable to the spot rate. Exchange loss Forward contract Record to adjust the forward contract to the spot rate. Cash (FC) Accounts receivable Record the receipt of cash. (Click to select) V (Click to select) (Click to select) Record the cash received from bank. Credit (b) Now assume that a discount rate of 6% per annum, or 0.5% per month, is applied when determining the fair value of the forward contract at December 31, Year 5. Prepare the journal entries to record (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount. In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank - be certain to enter "0" wherever required.) (1) The sale and forward contracts on December 1 and 3, Year 5 Date December 1, Year 5 General Journal Accounts receivable Sales Record the sales. Debit Credit 560800 560800 December 3, Year 5 No journal entry required No journal entry require Record the forward contract. (i) Any adjustments required on December 31 Date December 31, Year 5 General Journal Accounts receivable Exchange gain V Debit Credit Record to adjust the accounts receivable to closing exchange rate. Exchange loss Forward contract Record to adjust the forward contract to closing exchange rate. (i) The cash received and settlement of the contracts in Year 6 Date April 1, Year 6 General Journal Accounts receivable Exchange gain Debit Credit Record to adjust the accounts receivable to the spot rate. Exchange loss Forward contract Record to adjust the forward contract to the spot rate. Cash (FC) Accounts receivable Record the receipt of cash. Cash Forward contract Cash (FC) Record the cash received from bank.