EXERCISE $12-8$

Fair Value Hedge $($Unrecognized Firm Commitment$)0_6$

Vanderbilt Clothing Company placed a clothing order with a company located in Taiwan. The order was placed on November $1,$

$2019,$ for delivery on May $1,2020.$ Vanderbilt agreed to pay for the goods on May $1,2020,$ with the delivery of $5,000,000$ Taiwan

dollars. To protect against fluctuations in the exchange rate, the company entered into a forward contract on November $1,2019,$ to

buy $5,000,000$ Taiwan dollars on May $1,2020,$ for $$\mathrm{.}02634$ per unit.

Direct exchange rates per Taiwan dollar on specific dates are as follows:

Required:

Prepare the journal entries to be made by Vanderbilt Clothing Company during $2019$ and $2020$ to account for the transactions

described above.