On October 1, Year 6, Versatile Company contracted to sell merchandise to a customer in Switzerland at a selling price of CHF516,000. The contract called for the merchandise to be delivered to the customer on January 31, Year 7, with payment due on delivery. On October 1, Year 6, Versatile arranged a forward contract to deliver CHF516,000 on January 31, Year 7, at a rate of CHF1 = $2.27. Versatiles year-end is December 31.

The merchandise was delivered on January 31, Year 7, and CHF516,000 was received and delivered to the bank.

Exchange rates were as follows:

Required:

(a) Prepare the journal entries (using net method) that Versatile should make to record the events described assuming that the forward contract is designated as a cash flow hedge. (In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank - be certain to enter "0" wherever required.)

(b) Prepare a partial trial balance of the accounts used as at December 31, Year 6. (Leave no cells blank - be certain to enter "0" wherever required. Omit $ sign in your response.)

(c) Prepare the journal entries (using net method) that Versatile should make to record the events described, assuming that the forward contract is designated as a fair value hedge. (In cases where no entry is required, please select the option "No journal entry required" for your answer to grade correctly. Leave no cells blank - be certain to enter "0" wherever required.)

(d) Prepare a partial trial balance of the accounts used as at December 31, Year 6. (Leave no cells blank - be certain to enter "0" wherever required. Omit $ sign in your response.)

For contracts expiring on January 31 , Year 7. \begin{tabular}{|c|c|c|c|} \hline Date & General Journal & Debit & Credit \\ \hline \multirow[t]{3}{*}{ October 1, Year 6} & (Click to select) & & \\ \hline & (Click to select) & & \\ \hline & Record the forward contract. & & \\ \hline \multirow[t]{3}{*}{ December 31, Year 6} & (Click to select) & & \\ \hline & (Click to select) & & \\ \hline & Record the adjustment of forward & ward ra & \\ \hline \multirow[t]{13}{*}{ January 31 , Year 7} & (Click to select) & & \\ \hline & (Click to select) & & \\ \hline & Record the sales. & & \\ \hline & (Click to select) & & \\ \hline & (Click to select) & & \\ \hline & Record the adjustment of forward & ward ra & \\ \hline & (Click to select) & & \\ \hline & (Click to select) & & \\ \hline & Record the adjustment of other & ome. & \\ \hline & (Click to select) & & \\ \hline & (Click to select) & & \\ \hline & (Click to select) & & \\ \hline & Record the forward contract with & & \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|} \hline \multicolumn{4}{|c|}{\begin{tabular}{c} Partial trial balance \\ December 31 , Year 6 \end{tabular}} \\ \hline (Click to select) & & $ & \\ \hline (Click to select) & & $ & \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|c|} \hline \multicolumn{6}{|c|}{\begin{tabular}{c} Partial trial balance \\ December 31 , Year 6 \end{tabular}} \\ \hline (Click to select) & & $ & & $ & \\ \hline (Click to select) & & $ & & $ & \\ \hline (Click to select) & v & $ & & $ & \\ \hline \end{tabular}