Pacifico Company, a U$.$S$.-$based importer of beer and wine, purchased $2,100$ cases of Oktoberfest$-$style beer from a German supplier for $525,000$ euros. Relevant U$.$S$.$ dollar exchange rates for the euro are as follows:

Date Spot Rate Forward Rate to October $15$ Call Option Premium for October $15($strike price $$1\mathrm{.}60)$

August $15$ $ $1\mathrm{.}60$ $ $1\mathrm{.}66$ $ $0\mathrm{.}05$

September $301\mathrm{.}651\mathrm{.}690\mathrm{.}06$

October $151\mathrm{.}681\mathrm{.}68($spot$)$ N$/$A

The company closes its books and prepares third$-$quarter financial statements on September $30.$

required:

b$.$Assume that the beer arrived on August $15,$ and the company made payment on October $15.$ On August $15,$ the company entered into a two$-$month forward contract to purchase $525,000$ euros. The company designated the forward contract as a cash flow hedge of a foreign currency payable. Forward points are excluded in assessing hedge effectiveness and amortized to net income using a straight$-$line method on a monthly basis. Prepare journal entries to account for the import purchase and foreign currency forward contract.

Assume that the beer arrived on August $15,$ and the company made payment on October $15.$ On August $15,$ the company

two$-$month forward contract to purchase $525,000$ euros. The company designated the forward contract as a cash flow hed

currency payable. Forward points are excluded in assessing hedge effectiveness and amortized to net income using a strai

method on a monthly basis. Prepare journal entries to account for the import purchase and foreign currency forward contr

Note: If no entry is required for a transaction$/$event$,$ select $"$No Journal Entry Required" in the first account field. Do not rc

intermediate calculations.

Journal entry worksheet

Record the foreign exchange loss for the third quarter.

Note: Enter debits before credits. Assume that the beer arrived on August $15,$ and the company made payment on October $15.$ On August $15,$ the company

two$-$month forward contract to purchase $525,000$ euros. The company designated the forward contract as a cash flow hed

currency payable. Forward points are excluded in assessing hedge effectiveness and amortized to net income using a strai

method on a monthly basis. Prepare journal entries to account for the import purchase and foreign currency forward contr

Note: If no entry is required for a transaction$/$event$,$ select $"$No Journal Entry Required" in the first account field. Do not re

intermediate calculations.

Journal entry worksheet

$1$

$2$

$3$

$4$

$5$

$6$

$7$

$8$

$.....$

$13$

Record the entry for gain or loss on the forward contract on the payment date

when the spot exchange rate is $$1\mathrm{.}68$ per Euro.

Note: Enter debits before credits. Assume that the beer arrived on August $15,$ and the company made payment on October $15.$ On August $15,$ the company

two$-$month forward contract to purchase $525,000$ euros. The company designated the forward contract as a cash flow hed

currency payable. Forward points are excluded in assessing hedge effectiveness and amortized to net income using a strai

method on a monthly basis. Prepare journal entries to account for the import purchase and foreign currency forward contr

Note: If no entry is required for a transaction$/$event$,$ select $"$No Journal Entry Required" in the first account field. Do not rc

intermediate calculations.

Journal entry worksheet

$1$

$2$

$3$

$4$

$5$

$6$

$7$

$8$

:'cdots

$13$

Record the change in the fair value of the forward contract on October $15$

when the spot rate is $$1\mathrm{.}68$ per Euro.

Note: Enter debits before credits. Assume that the beer arrived on August $15,$ and the company made payment on October $15.$ On August $15,$ the company

two$-$month forward contract to purchase $525,000$ euros. The company designated the forward contract as a cash flow hed

currency payable. Forward points are excluded in assessing hedge effectiveness and amortized to net income using a strai

method on a monthly basis. Prepare journal entries to account for the import purchase and foreign currency forward contr

Note: If no entry is required for a transaction$/$event$,$ select $"$No Journal Entry Required" in the first account field. Do not rc

intermediate calculations.

Journal entry worksheet

$1$

dots$6$

$7$

$8$

$9$

$10$

$11$

$12$

$13$

Record a foreign exchange loss on the forward contract to offset the foreign

exchange gain on the accounts payable.

Note: Enter debits before Journal entry worksheet

$1$

$.$

$6$

$7$

$8$

$9$

$10$

$11$

$12$

$13$

Record the foreign exchange loss for the fourth quarter.

Note: Enter debits before credits.

$\backslash$table$[[$Date$,$General Journal,Debit,Credit$],[10/15,,,],[,,,],[,,,],[,,,],[,,,]]$credits$.$