1. On June 1, 2017, Adam Inc. agreed to purchase $200,000 in U.S. currency for $222,000 in Canadian currency in 45 days from Bay Bank. The balance sheet date of Adam Inc. is June 30. On June 30, 2017, the fair value of the forward contract was determined to be $7,000 in Canadian dollars. On July 15, 2017, Adam Inc. settled the forward contract by taking delivery of the U.S. dollars. The U.S. dollar was worth $1.14 Canadian dollars on July 15, 2017.

Required (7 marks):

Prepare journal entries needed at June 30, 2017 and July 15, 2017.

2. On January 1, 2013, Clark Corporation granted 30,000 stock options to top executives. Each option allows the executives to purchase one share of Clarks common shares at a price of $20. The options were exercisable within a two-year period beginning January 1, 2015, if the grantee was still employed by the company at the time of the exercise. On the grant date, a fair value option pricing model determined total compensation to be $150,000. On June 1, 2015, 12,000 options were exercised when the market price of Clarks shares was $25. The remaining options lapsed on January 1, 2017 (Executives decided not to exercise options). The balance sheet date of Clark Corporation is December 31.

Required (7 marks):

Prepare journal entries needed at December 31, 2013; June 1, 2015; January 1, 2017.