CHAPTER 11, 4

PLEASE READ: Question has five parts (A-E), please answer the FULL question, please TYPE your answer, please LABEL your answer

On December 1, 20X1, Micro World Inc. entered into a 120-day forward contract to purchase 110,000 Australian dollars (A$). Micro World's fiscal year ends on December 31. The direct exchange rates follow: Forward Rate for March 31, 20X2 $0.609 0.612 0.605 Spot Rate Date December 1, 20x1 December 31, 20x1 January 30, 20x2 March 31, 20x2 $0.600 0.610 0.608 0.602 Required: Prepare all journal entries for Micro World Inc. for the following independent situations: a. The forward contract was to manage the foreign currency risks from the purchase of furniture for A$110,000 on December 1, 20X1, with payment due on March 31, 20X2. The forward contract is not designated as a hedge. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)