On October 1, 2011, Jarvis Co

question 44

Essay

On October 1, 2011, Jarvis Co. sold inventory to a customer in a foreign country, denominated in 100,000 local currency units (LCU). Collection is expected in four months. On October 1, 2011, a forward exchange contract was acquired whereby Jarvis Co. was to pay 100,000 LCU in four months (on February 1, 2012) and receive $78,000 in U.S. dollars. The spot and forward rates for the LCU were as follows: The company's borrowing rate is 12%. The present value factor for one month is .9901.
Any discount or premium on the contract is amortized using the straight-line method.
Assuming this is a cash flow hedge; prepare journal entries for this sales transaction and forward contract.

---

Definitions:

Amygdala

A part of the brain involved in experiencing emotions, particularly fear and pleasure, and in forming emotional memories.

Imprinting

A rapid learning process occurring early in the life of certain animals, leading them to recognize a specific stimulus (often a parent) as an object of trust and focus.

Responsive And Sensitive

Being responsive and sensitive involves reacting quickly and appropriately to stimuli or emotional cues, showing an acute awareness of the feelings and needs of others.

Negative Emotions

Feelings that are generally considered to be distressing and unpleasant, such as sadness, anger, and fear.