Consider the Following Information

Essay

Consider the following information:
1. On November 1, 2017, a U.S. firm contracts to sell equipment (with an asking price of 500,000 pesos) in Mexico. The firm will take delivery and will pay for the equipment on February 1, 2018.
2. On November 1, 2017, the company enters into a forward contract to sell 500,000 pesos for $0.0948 on February 1, 2018.
3. Spot rates and the forward rates for February 1, 2018, settlement were as follows (dollars per peso): 4. On February 1, the equipment was sold for 500,000 pesos. The cost of the equipment was $20,000.
Required:
Prepare all journal entries needed on November 1, December 31, and February 1 to account for the forward contract, the firm commitment, and the transaction to sell the equipment.