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Show the journal entries related to the forward contract

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Reference no: EM132942576

Nereus Elevation & Storage Ltd. (NES) operates grain elevators in southwestern Ontario. The company ordered £66,000 of grain handling equipment from a Scottish manufacturer on November 1, 2020. The equipment will be delivered on December 15, 2020 and has 30-day terms. On November 15, 2020 NES Ltd.'s treasurer decided to hedge the purchase with a forward contract. The forward rate on November 15 was 1.71 CAD/£. By December 31, the market rate had increased to 1.73 CAD/£, before it fell back to 1.67 CAD/£ on January 15.

Problem (a) Show the journal entries related to the forward contract on November 15, 2020, December 31, 2020 and January 15, 2021, the settlement date.

Reference no: EM132942576

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