(Forecasted Transaction) Everything remains exactly the same as in Problem II except that this is a forecasted transaction. Instructions: Prepare all journal entries relative to the above on the following dates:

1. November 1, 2019. 2. Year-end adjustments on December 31, 2019. 3. March 1, 2020. (Include all adjustments related to the forward contract)

Problem IV: On 7/1/2020, Optical company forecasts the purchase of inventory from a foreign vendor. The cost is estimated to be 550,000 FCU. The inventory will be delivered on 9/15/2020. Also, on 7/1/2020, the company paid $3,000 to purchase a call option to buy 550,000 FCU at a strike price of $0.378 expiring end of September.

1-Jul Spot Rate $0.375 FV of Option $3,000

31-Jul 31-Aug 15-Sep $0.364 $0.396 $0.392 $2,500 $6,500

Instructions: Prepare the journal entries on the dates listed (The company prepared monthly financial statements):

Assuming that on 9/15/2020 the option was exercised and inventory delivered and paid.

What if the spot rate on 9/15/2020 was $0.373?