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What are the journal entries for these transactions

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Question - On December 1, 2020, Star Incorporated, a U.S. company, sells parts to a French company, with payment of 50,000 Euros to be received on March 1, 2021. Star also enters into a forward contract on December 1, 2020 to sell 50,000 Euros on March 1, 2021. Exchange rates for the euro on various dates are as follows:

Date Spot Rate Forward Rate (to March 1, 2021)

December 1, 2020 $1.20 $1.23

December 31, 2020 1.25 1.26

March 1, 2021 1.28 N/A

Star must close its books and prepare financial statements at December 31. The forward points on the forward contract are excluded in assessing hedge effectiveness and are amortized to net income using a straight-line method on a monthly basis. Assuming that Star designates the forward contract as a cash flow hedge of a foreign currency receivable. What are the journal entries for these transactions in U.S. dollars on 12/1/2020, 12/31/2020, and 3/1/2021.

Reference no: EM133038384

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