On January 1, 20X1, a U

Essay

On January 1, 20X1, a U.S. firm bought a truck from a foreign firm for 10,000 FC, to be paid on March 1 in FC. The spot rate was 1 FC = $1.25 on January 1 and 1 FC = $1.265 on March 1. To protect themselves from exchange rate changes, the U.S. firm entered into a forward exchange contract on January 1 to buy FC on March 1 for $1.28.
Required:
Make all the necessary journal entries to record the transactions for the U.S. firm on January 1 and March 1. Ignore the split between spot gain/loss and time value.