On October $1,2024,$ Cullumber Corporation ordered some equipment from a supplier for $321,000$ euros. Delivery and payment are to Account Titles and Explanation

Debit

Credit

$($To record gain or loss on foreign currency$)$

$($To record gain or loss on firm commitment$)($To record gain or loss on firm commitment$)$

$$

$|$

occur on November $15,2024.$ The spot rates on October $1$ and November $15,2024,$ are $$1\mathrm{.}20$ and $$1\mathrm{.}30,$ respectively.

$(a)$

Assume that Cullumber entered into a forward contract on October $1,2024,$ to hedge the firm commitment. The forward rates for

euros for November $15$ delivery were

October $1,$$$1\mathrm{.}23$

November $15,$$$1\mathrm{.}30$

Furthermore, assume the equipment was purchased and paid for on November $15.$ Prepare all journal entries needed to record

and settle the hedge and to record the purchase of the equipment. $($Credit account titles are automatically indented when the amount

Accounts Payable

$($To record gain or loss on foreign currency$)$

$($To record gain or loss on firm commitment$)($To record payment to exchange dealer and receipt of

foreign currency$)$

$($To record settlement of firm commitment$)($b$)$

If the forward contract was not acquired, record the journal entry to purchase the equipment. $($Credit account titles are

automatically indented when the amount is entered. Do not indent manually. If no entry is required, select $"$No entry" for the account titles

and enter $0$ for the amounts. List debit entry before credit entry.$)$

Account Titles and Explanation

Debit

Credit

List of Accounts