Question: On December 1 , 2 0 X 1 , Micro World Incorporation entered into a 1 2 0 - day forward contract to sell 1

On December 1,20X1, Micro World Incorporation entered into a 120-day forward

On December

1, 20

1,

Micro World Incorporation entered into a

120 -

day forward contract to sell

100, 000

Australian dollars

(

) .

Micro

World's fiscal year ends on December

31 .

The direct exchange rates follow:

Required:

Prepare all journal entrles for Micro World Incorporated for the following Independent situations.

The forward contract was to manage the foreign currency risks from the sale of furniture for

A

100, 000

on December

1, 20 1,

with

payment due on March

31, 20

2

The forward contract is not designated as a hedge.

The forward contract was to hedge an anticlpated sale of furniture on January

30 .

The sale took place on January

30

with payment

due on March

31, 20

2 .

The derlvative is designated as a cash flow hedge. The company uses the forward exchange rate to

measure hedge effectlveness.

The forward contract was for speculative purposes only.

Answer is not complete.

Complete this question by entering your answers in the tabs below.

The forward contract was for speculative purposes only.

Note: If no entry is required for a transaction

/

event

,

select

"

No journal entry required" in the first account field.

contract to sell 100,000 Australian dollars (A$). Micro World's fiscal year ends

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