A US Company Sells Merchandise to a German Customer on May

Essay

A U.S. company sells merchandise to a German customer on May 1 for €100,000. The customer pays the bill on August 1. To hedge foreign exchange risk, on May 1 the U.S. company enters a forward sale contract for €100,000 with an August 1 delivery date. On August 1, the company collects the €100,000 from the customer and closes the forward contract. The company's fiscal year ends June 30. Relevant rates ($/€) are as follows:
$$\begin{array} { | l | c | c | } \hline & \text { Spot Rate } & \begin{array} { c } \text { Forward Rate for } \\\text { August 1 Delivery }\end{array} \\\hline \text { May 1 } & \$ 1.235 & \$ 1.237 \\\hline \text { June 30 } & 1.241 & 1.244 \\\hline \text { August 1 } & 1.256 & 1.256 \\\hline\end{array}$$ Required
Make the journal entries to record the above events, including appropriate fiscal year-end adjusting entries.