Purchase of inventory $ 1,500,000

Foreign exchange contract $ 1,000,000

Receivable on
Amount payable on
Date Spot rate Forward rate forward rate
forward contract
contract
1-Mar-18 0.7
1-May-18 0.75 0.73 $ 1,369,863 $ 1,369,863
30-Jun-18 0.72 0.7 $ 1,428,571 $ 1,369,863
1-Aug-18 0.7 0.7 $ 1,428,571 $ 1,369,863

Date Particulars DR $ CR $
1-Mar-18 DR Inventory $ 2,142,857
CR Accounts payable $ 2,142,857
(1500000/0.70)
1-May-18 DR Accounts Payable $ (142,857) Recording foreign
exchange loss on
CR Foreign exchange accounts payable
gain $ (142,857)
(1500000/0.75)-
(1500000/0.70)
30-Jun-18 DR Forward contract $ 58,708
CR Gain on forward
contract $ 58,708
DR Foreign exchange
30-Jun-18 loss $ 83,333
CR Accounts payable $ 83,333
(1500000/0.72)-
(1500000/0.75)
1-Aug-18 DR Forward contract -
CR Gain on forward
contract -
DR Foreign exchange
1-Aug-18 loss $ 59,524
CR Accounts payable $ 59,524
(1500000/0.70)-
(1500000/0.72)
1-Aug-18 DR Accounts Payable $ 2,142,857
CR Forward contract $ 58,708
CR Cash $ 2,084,149
 Fair value of Gain/(loss)
forward on forward
contract contrract
-
0
58708 58708
$ 58,708 $ -

ng foreign
e loss on
s payable