Date Account PR Debit

Oct 02, Year 1 Forward Contract 341,600

Payable to bank
To recognize forward contract (280,000*1.220)

Dec. 31 Forward contract 2,800

OCI- Foreign exchange gain
((1.230-1.220)*280,000)

Jan 30, Year 2 Equipment 342,160

Accounts payable
Recording purchased equipment (1.222*280,000)

Forward contract 1,400

OCI- Foreign exchange gain
Adjust forward contract as per forward rate (1.235-1.230*280,000)

OCI- Foreign exchange gain 4,200

Equipment
OCI foreign exchange gain being adjusted 2,800+1,400

Feb. 15 Foreign exchange gain/loss 5,040

Accounts payable
Adjust A/P to fair value (1.240-1.222*280,000)

Forward contract 1,400

OCI- foreign exchange gain
Adjusting forward contract to settlement date (1.240-1.235*280,000)

Feb. 15 Accounts payable 347,200

Cash
Payment to suppliers

Cash 347,200
Forward contract
Bank gave cash

Payable to bank 341,600

Cash
Fix hedge payment
Credit

341,600

2,800

342,160

1,400

4,200

5,040

1,400

347,200

347,200

341,600