On April 1, Quality Corporation, a U.S. company, expects to sell merchandise to a French...
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On April 1, Quality Corporation, a U.S. company, expects to sell merchandise to a French customer in three months, denominating the transaction in euros. On April 1, the spot rate is 51.45 per euro, and Quality enters into a three-month forward contract cash flow hedge to sell 400,000 euros at a rate of $1.35. At the end of three months, the spot rate is $1.38 per euro, and Quality delivers the merchandise, collecting 400.000 euros. What are the effects on net income from these transactions (please prepare all applicable journal entries)? D
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