Acc401 Advanced Accounting: E12-7 ASI recently completed the development and installation

Acc401 Advanced Accounting
Exercise 12-7
ASI recently completed the development and installation of an accounting information system for a company located in Rio De Janeiro, Brazil. The company considered that all revenue realization criteria were satisfied and accordingly recorded on October 2, 2008, a receivable from the foreign company. The receivable is to be settled in 120 days on February 1 by the delivery of 300,000 Real. To hedge against an unfavorable change in the foreign exchange rate, ASI acquired a forward contract to sell 300,000 real on February 1 for $.4730 per real. The following exchange rates were quoted:
Date Spot Rate Forward Rate (Delivery on 2/1)
2-Oct 0.4737 0.4730
31-Dec 0.4895 0.4810
1-Feb 0.4950 -
ASI is a calendar-year company.

a. Prepare the journal entries to record the transactions, adjust the accounts on December 31, and settle the receivable and forward contract on February 1.
b. (1) Based on the data given above, complete the following table.
(2) What was the cumulative effect on net income (ie., 2008 plus 2009)?
(3) How much cash was received when the account was settled?
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