ABC purchased inventory from XYZ, a company in Canada, for 70,000 Canadian dollars on May 10, 2022.

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Question:

ABC purchased inventory from XYZ, a company in Canada, for 70,000 Canadian dollars on May 10, 2022. Payment was made on August 20, 2022. Additionally, on May 10, ABC entered into a 90-day forward contract to purchase C$32,000 at C$1 = $0.50. The forward contract was purchased to hedge the risk of changes in the Canadian dollar, but was not designated as a hedge. The relevant exchange rates are as follows: May 10, 2022 C$1 = $0.52 August 20, 2022 C$1 = $0.49

REQUIRED: Prepare all journal entries in the ABC books to record the inventory purchase, forward contract, and inventory payment. ABC uses the perpetual inventory system.