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Firm purcahse commitment, foreign currency hedge

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On November 2, 2006, Import Bazaar, a US retailr, ordered merchandise from
Matsushita Co. of Japan. The merchandise is to b delivered to Import Bazaar
on January 30, 2007 at a price of 1,000,000 yen. Also on Novmber 2, Import Baazar
hedged the foreign currency commitment with Matsushita by contracting with its
exchange broker to buy 1,000,000 yen for delivery on January 30.

11/2/2006 12/31/2006 1/30/2007
Spot rate 0.0075 0.0076 0.0078
30-day forward rate 0.0076 0.0078 0.0079
90-day forward rate 0.0078 0.0079 0.008

1. Prepare the entry (or entries) on Import Bazaar's books on November 2, 2006
2. Prepare the adjusting entry on December 31, 2006

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The expert examines the firm purchase commitment for foreign currency hedge.

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QUESTIONS
On November 2, 2006, Import Bazaar, a US retail, ordered merchandise from
Matsushita Co. of Japan. The merchandise is to b ...

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