Problem 7

Greater NIA, Inc., whose functional currency is the PhPeso, sold merchandise to a foreign buyer for FC100,000 on December 1, 2020. Payment is due February 28, 2021. The spot exchange rate on that date was P1.85:1FC. Predicting the PhPeso will likely strengthen against the foreign currency by the settlement date, Greater NIA hedged the exposed FC receivable by entering into a forward contract for the sale of FC100,000 for delivery on February 28, 2021. The relevant direct-quote exchange rates between the two currencies at different dates follow:

Spot rates Forward rate to 2/28/21

At December 31, 2020 (Greater NIAs year-end) 1.835 1.825

At February 28, 2021 1.820

Ignore discounting for simplification purposes.

Required: Prepare all the journal entries for the above information.