On 1 May 2022, Ocean Blue Ltd enters a forward exchange contract to sell US$180 000 in 8 months’ time at 31 December 2022. The relevant exchange rates are:1 May 2022: Spot rate (US$1.00 = A$1.00); Forward Rate (for 31 Dec. 2022)(US$1.00 = A$1.05).30 June 2022 -end of reporting period: Spot Rate (US$1.00 = A$0.98); Forward Rate (for 31 Dec. 2022)(US$1.00 = A$1.02).31 December 2022 –contract settlement date: Spot Rate (US$1.00 = A$0.95); Forward Rate (for 31 Dec. 2022)(US$1.00 = A$0.95).The journal entry required at 31 December2022 to record any foreign exchange gain or loss on the forward contract is:

a. DR Loss of forward contract A$(180 000x (0.95-1.02); CR Forward contract A$(180 000x (0.95-1.02)

b. DR Loss of forward contract A$(180 000x (1.05-1.02); CR Forward contract A$(180 000x (1.05-1.02)

c. DR Forward contract A$(180 000x (0.95-1.02); CR Gain on forward contract A$(180 000x (0.95-1.02);

d. No entry is required.

Answer rating: 100% (QA)

C DR Forward contract A180 000x 095102 ... View the full answer