On October 1, 2020, a U Required:
A

Essay

On October 1, 2020, a U.S. company expects to purchase merchandise from a Singapore supplier for around S$100,000, at the end of March, payment to be made on delivery. To hedge the expected purchase, on October 1, 2020, the company enters a forward contract that locks in the purchase price of S$100,000 for delivery on March 31, 2021. The company takes delivery of the merchandise on March 31, 2021, the company closes the forward and immediately pays the supplier. The forward contract qualifies as a cash flow hedge of the forecasted transaction. The company has a December 31 year-end. Forward and spot prices for Singapore dollars ($/S$) are as follows:
$$\begin{array} { | l | c | c | } \hline & \text { Spot Rate } & \begin{array} { c } \text { Forward Rate for } \\\text { March 31, 2021 Delivery }\end{array} \\\hline \text { October 1, 2020 } & \$ 0.754 & \$ 0.756 \\\hline \text { December 31, 2020 } & 0.775 & 0.776 \\\hline \text { March 31, 2021 } & 0.772 & 0.772 \\\hline\end{array}$$ Required:
a. Prepare the journal entries to record the above events, including year-end adjustments.
b. The company sells the inventory on June 1, 2021. Prepare the journal entry to record the cost of goods sold.
c. Repeat requirements a. and b., assuming the forward contract does not qualify for hedge accounting.