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On December 1,2016,Dorn Corporation Agreed to Purchase a Machine to Be

Question 22

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On December 1,2016,Dorn Corporation agreed to purchase a machine to be manufactured by a company in Brazil.The purchase price is 1,150,000 Brazilian reals.To hedge against fluctuations in the exchange rate,Dorn entered into a forward contract on December 1 to buy 1,150,000 reals on April 1,the agreed date of machine delivery,for $0.375 per real.The following exchange rates were quoted:
On December 1,2016,Dorn Corporation agreed to purchase a machine to be manufactured by a company in Brazil.The purchase price is 1,150,000 Brazilian reals.To hedge against fluctuations in the exchange rate,Dorn entered into a forward contract on December 1 to buy 1,150,000 reals on April 1,the agreed date of machine delivery,for $0.375 per real.The following exchange rates were quoted: Required: Prepare journal entries necessary for Dorn during 2016 and 2017 to account for the transactions described above. Required:
Prepare journal entries necessary for Dorn during 2016 and 2017 to account for the transactions described above.

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