A US Company Plans to Sell RM100,000 in Merchandise to a a Malaysian

Essay

A U.S. company plans to sell RM100,000 in merchandise to a Malaysian customer at the beginning of September 2020, with payment to be received in ringgits (RM). On June 1, 2020, it enters a forward contract, locking in the selling price of RM100,000 at $0.256/RM for delivery on September 1, 2020. The forward contract qualifies as a cash flow hedge of a forecasted transaction. On September 1, 2020, the company delivers RM100,000 in merchandise to the Malaysian customer, collects RM100,000 payment from the customer, and exchanges it for U.S. dollars using the forward contract. The company's accounting year ends June 30. Exchange rates ($/RM) are as follows:
$$\begin{array} { | l | c | c | } \hline & \text { Spot Rate } & \begin{array} { c } \text { Forward Rate for } \\\text { September 1, 2020 Delivery }\end{array} \\\hline \text { June 1, 2020 } & \$ 0.258 & \$ 0.256 \\\hline \text { June 30, 2020 } & 0.254 & 0.253 \\\hline \text { September 1, 2020 } & 0.252 & 0.252 \\\hline\end{array}$$ Required
Prepare the journal entries to record these events, including year-end adjusting entries.