Merchandise 1,000,000 yen Merchandise 1,000,000 yen

02/11/16 31/12/16 31/01/17 01/11/16 31/12/16 31/01/17

Spot rate $0.0078 $0.0070 $0.0075 Spot rate $0.0078 $0.0076 $0.0075
30-day forward rate $0.0079 $0.0078 $0.0076 30-day forward rate $0.0079 $0.0078 $0.0076
90-day forward rate $0.0080 $0.0079 $0.0078 90-day forward rate $0.0078 $0.0079 $0.0078

7800 7600 7500

7900 7800 7600
8000 7900 7800
Nov, 2-2016 Jan, 31-2017
Merchandise Inventory $7,800 Account Payable $100 Dec 31 198
Account Payable $7,800 Exchange Gain $100 Jan 31 -300
(To record purchase on merchandise from Mat; 1.000.000 yen x $0.0078) (To adjust account payables to Jan 31 spot exchange rate; 1.000.000 yen x ($0.0076 - -500
$0.0075))
Contract Receivable $8,000
Contract Payable $8,000 Account Payable $7,500
(To record contract to buy 1.000.000 yen in 90 days; 1.000.000 yen x $0.0080) Cash $7,500
(To record payment to Mat; 1.000.000 yen x $0.0075)
Dec, 31-2016
Account Payable $200 Cash $7,500
Exchange Gain $200 Exchange Loss $302
(To adjust account payables to year-end spot exchange rate; 1.000.000 yen x ($0.0078 - Contract Receivable $7,802
$0.0076)) (To record receipt of 1.000.000 yen from exchange broker)

Exchange Loss $198 Contract Payable $8,000

Contract Receivable $198 Cash $8,000
(To adjust contract receivable to exchange broker to year-end forward exchange rate. (To record payment to exchange broker; 1.000.000 yen x $0.0080)
Receivable: (1.000.000 yen x ($0.0080 - $0.0078))/(1.01)