Reference no: EM132490405

Point 1: On October 1, 2018, the treasurer of Canada Corporation took the view that the American dollar was overvalued relative to the Canadian dollar. As a result, on that date, the company entered into a forward sales contract with its bank to sell US$2,000,000 to the bank on March 31, 2019, at the contract rate of $1.32. On March 31, 2019, the company purchased US$2,000,000 from the bank at that day's spot rate of $1.22 and settled the forward contract with the bank.

Point 2: The spot rate on October 1, 2018, for the American dollar was was $1.34 and at December 31, 2018, was $1.30. The forward rate to March 31, 2019, was $1.28 on December 31, 2018.

Required:

Question 1: Prepare all the journal entries to record the transactions set out above.