On December $1,20$X$1,$ Micro World Incorporation entered into a $120-$day forward contract to sell $100,000$ Australian dollars $($A$$).$ Micro World$$s fiscal year ends on December $31.$ The direct exchange rates follow:

DateSpot RateForward Rate for March $31,20$X$2$December $1,20$X$1$$ $0\mathrm{.}600$$ $0\mathrm{.}609$December $31,20$X$10\mathrm{.}6100\mathrm{.}612$January $30,20$X$20\mathrm{.}6080\mathrm{.}605$March $31,20$X$20\mathrm{.}602$

Required:

Prepare all journal entries 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 $1,20$X$1,$ with payment due on March $31,20$X$2.$ The forward contract is not designated as a hedge.

The forward contract was to hedge an anticipated sale of furniture on January $30.$ The sale took place on January $30$ with payment due on March $31,20$X$2.$ The derivative is designated as a cash flow hedge. The company uses the forward exchange rate to measure hedge effectiveness.

The forward contract was for speculative purposes only. Journal entry worksheet

$1$

$2$

$3$

$4$

$5$

Record a $120-$day forward contract signed for speculation.

Note: Enter debits before credits. Assessment Tool iFrame :ry worksheet

$1$

$2$

$3$

$4$

$5$

Record the revaluation of the foreign currency payable to the equivalent U$.$S$.$ dollar value.

Note: Enter debits before credits.

Journal entry worksheet

Record the revaluation of the foreign currency payable.

Note: Enter debits before credits. Journal entry worksheet

Record the receipt of U$.$S$.$ dollars from an exchange broker as required by the forward contract.

Note: Enter debits before credits. Journal entry worksheet

$4$

Record the payment of A$\backslash$$$100,000$ to the exchange broker in accordance with the forward contract.

Note: Enter debits before credits.