Question: P 13-2 Sale commitments, entries, no net settlement US Mill, Inc. sold merchandise to Jang Ltd. for W25bn on October 1, 2014. The billing

P 13-2 Sale commitments, entries, no net settlement US Mill, Inc. sold

P 13-2 Sale commitments, entries, no net settlement US Mill, Inc. sold merchandise to Jang Ltd. for W25bn on October 1, 2014. The billing date is on October 1, 2014, and payable in 120 days, on January 30, 2015. Mill decided to enter a forward contract to deliver W25bn to its exchange broker in 180 days. No net settlement was allowed for the contract. Assume an annual interest rate of 12 percent. Selected exchange rates for the Korean won are as follows: Spot rate 30-day forward rate 90-day forward rate 120-day forward rate Oct 1, 2014 Dec 31, 2014 Jan 30, 2015 $0.00096 $0.00094 $0.00092 $0.00095 $0.00093 $0.00093 $0.00094 $0.00092 $0.00091 $0.00094 $0.00091 $0.00090 REQUIRED: Prepare all necessary journal entries and adjusting entries to account for the transaction above.

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