C1. On October 15, our company has executed a purchase order for new equipment to be purchased...

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C1. On October 15, our company has executed a purchase order for newequipment to be purchased from a supplier in Denmark for a purchaseprice of DKK 1.2 million. The equipment is deliverable on March 31.In order to hedge the commitment to pay DKK1.2 million, we enterinto a forward exchange contract on October 15 to receive DKK1.8million on March 31 at an exchange rate of $0.17: DKK1. Assume thefollowing exchange gates:
Date
Spot Rates
Forward Rates
October 15
$0.15:DKK1
$0.17:DKK1
December 31
$0.16:DKK1
$0.18:DKK1
March 31
$0.20:DKK1
n/a
Required: Prepare the journal entries to record thefollowing:
Execution of the purchase order and forward contract
Adjusting entries at December 31
Receipt of equipment and payment to equipment supplier on March31.

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C1. On October 15, our company has executed a purchase order for newequipment to be purchased from a supplier in Denmark for a purchaseprice of DKK 1.2 million. The equipment is deliverable on March 31.In order to hedge the commitment to pay DKK1.2 million, we enterinto a forward exchange contract on October 15 to receive DKK1.8million on March 31 at an exchange rate of $0.17: DKK1. Assume thefollowing exchange gates:DateSpot RatesForward RatesOctober 15$0.15:DKK1$0.17:DKK1December 31$0.16:DKK1$0.18:DKK1March 31$0.20:DKK1n/aRequired: Prepare the journal entries to record thefollowing:Execution of the purchase order and forward contractAdjusting entries at December 31Receipt of equipment and payment to equipment supplier on March31.

Date	Spot Rates	Forward Rates
October 15	$0.15:DKK1	$0.17:DKK1
December 31	$0.16:DKK1	$0.18:DKK1
March 31	$0.20:DKK1	n/a