On July 1, 2014, When the Spot Rate Was US$1

Multiple Choice

On July 1, 2014, when the spot rate was US$1 = CDN$1.1445, North Inc., based in Alberta, ordered merchandise from an American supplier for US$600,000. Delivery was scheduled for the month of September, with payment to be made in full on November 15, 2014. Once the order was placed, North entered into a forward contract with its bank to purchase US$600,000 on the settlement date at the forward rate of $1.1625CDN. The forward contract was designated as a cash flow hedge of the cash flow required to settle with the American supplies. The merchandise was received on October 1, 2014, when the spot rate was US$1 = $1.1575CDN. On October 31, the company's year-end, the spot rate was $1.1690. North purchased the U.S. dollars to pay its supplier on November 15, 2014 when the spot rate was $1.1725CDN. The forward rate to November 15, 2014, was $1.165CDN on October 1 and $1.17CDN on October 31. What is the journal entry required to record the ordering of North's merchandise?

A) No entry is required.
B)
C)
D)