Prepare all journal entries arising from this transaction

Reference no: EM133650447

Question

Timber Inc. sells lumber to clients around the world. On December 1, Year 5, the company shipped some lumber to a client in the US. The selling price was established at $600,000 US with payment to be received on March 1, 2016. On December 3, Year 5 , the company entered into a hedge with a Canadian Bank at the 90 day forward rate of $1US=$1.275CDN. Timber Inc. received the payment from its American client when due. The company's year-end is on December 31. Selected spot rates were as follows: Decomber 1, Year 5: ,1 US =$1.2355CDN December 31, Year 5: ,1 US =$1.2455CDN March 1, Year 6: ,1 US =$1.2480CDN December 31, Year 5,60 day forward rate $1US=$1.250CDN Required: Prepare all the journal entries arising from this transaction, from original sale to final settlement. Timber prepares a journal entry to recognize the hedge at inception. Use proper account titles throughout.

Reference no: EM133650447

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