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Make the journal entries required to record the fair value

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On May 15, 2020, Global Exports Ltd. shipped a large order to a customer in Cairo, Egypt (per the terms of the sale, title to the product passed to the customer when shipped from Calgary). The currency of Egypt was the Egyptian Pound (EGP). The total order was EGP 1,500,000, payable to Global on June 15, 2020. Immediately upon shipping the order, Global entered into a forwarding contract with its bank to sell EGP 1,500,000 to the bank on June 15, the day that Global expected to receive payment from its customer in Cairo. Global's controller chose to use hedge accounting for this transaction, and the company's year-end was May 31. Foreign exchange rates were as follows: Date Spot Rate Forward Rate May 15 1 EGP = CAD 0.0785 1 EGP = CAD 0.0810 May 31 1 EGP = CAD 0.0811 1 EGP = CAD 0.0799 June 15 1 EGP = CAD 0.0841 1 EGP = CAD 0.0841

REQUIRED:

Problem 1: Prepare the journal entries required to record the fair value hedge on the books of Global Exports Ltd.

Reference no: EM132755380

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