Provide the journal entries related to the two sale transactions and any hedging transactions Provide the journal entries related to the two sale transactions and any hedging transactions 1. Provide...

TanCorp F.S. (Yuan)
    TanCorp            TanCorp            TanCorp
    Income Statement (Yuan)            Statement of Retained Earnings (Yuan)            Balance Sheet (Yuan)
    For the year ended December 31, Y1            For the year ended December 31, Y1            December 31, Y1
    Sales    ¥127,854,000        Beginning retained earnings, 1/1/Y1    ¥2,843,395        Assets                Liabilities
    COGS    ¥88,237,140        Net income, Y1    ¥38,192,010            Cash    ¥17,537,190            Accounts payable    ¥15,923,050
    Gross profit    ¥39,616,860        Less: dividends declared, Y1    ¥12,000,000            Accounts receivable    ¥23,540,065            Unearned revenue    ¥12,293,040
    Selling expenses    ¥12,675        Ending retained earnings, 12/31/Y1    ¥29,035,405            Inventory    ¥25,482,150        Total current liabilities        ¥28,216,090
    General & administrative expenses    ¥25,480                    Total current assets        ¥66,559,405            Notes payable    ¥25,402,930
    R&D expense    ¥12,850                        PP&E, net    ¥127,852,040        Total long-term liabilities        ¥25,402,930
    Operating income    ¥39,565,855                        Patent    ¥986,290
    Other income/(loss)    ¥11,820                        Other intangible assets    ¥350,400        Total liabilities        ¥53,619,020
    Net income before taxes    ¥39,577,675                    Total long-term assets        ¥129,188,730
    Income taxes    ¥1,385,665                                    Stockholders' Equity
    Net income    ¥38,192,010                    Total Assets        ¥195,748,135            Common stock    ¥50,554,500
                                                Additional paid-in-capital    ¥62,539,210
                                                Retained earnings    ¥29,035,405
                                            Total Liabilities & Stockholders' Equity        ¥195,748,135
TechSmart F.S. (USD)
    TechSmart            TechSmart            TechSmart
    Parent-Only Income Statement (USD)            Parent-Only Statement of Retained Earnings (USD)            Parent-Only Balance Sheet (USD)
    For the year ended December 31, Y1            For the year ended December 31, Y1            December 31, Y1
    Sales    $56,728,540        Beginning retained earnings, 1/1/Y1    $81,142,725        Assets                Liabilities
    COGS    $22,817,290        Net income, Y1    $11,099,900            Cash    $14,520,325            Accounts payable    $18,293,020
    Gross profit    $33,911,250        Less: dividends declared, Y1    $0            Accounts receivable    $21,320,520            Unearned revenue    $5,329,500
    Selling expenses    $8,548,230        Ending retained earnings, 12/31/Y1    $92,242,625            Inventory    $32,850,230        Total current liabilities        $23,622,520
    General & administrative expenses    $6,738,020                    Total current assets        $68,691,075            Bonds payable    $120,829,030
    Operating income    $18,625,000                        PP&E, net    $132,859,300        Total long-term liabilities        $120,829,030
    Other income/(loss)    ($1,548,230)                        Investments*    $56,923,950
    Net income before taxes    $17,076,770                        Other assets    $53,903,190        Total liabilities        $144,451,550
    Income taxes    $5,976,870                    Total long-term assets        $243,686,440
    Net income    $11,099,900                                    Stockholders' Equity
                            Total Assets        $312,377,515            Common stock    $48,293,050
                                                Additional paid-in-capital    $27,390,290
                                                Retained earnings    $92,242,625
                                            Total Liabilities & Stockholders' Equity        $312,377,515
                            *Includes equity investment in TanCorp as well as other investments
Exchange Rates
    Date    Spot Rate (USD/Yuan)    Forward Rate, 1/10/Y2 (USD/Yuan)
    1/1/Y0    $ 0.1417    $ 0.1403
    1/1/Y1    $ 0.1406    $ 0.1384
    10/31/Y1    $ 0.1421    $ 0.1424
    11/10/Y1    $ 0.1429    $ 0.1429
    12/31/Y1    $ 0.1436    $ 0.1434
    Average, Y1    $ 0.1423    $ 0.1418
    1/10/Y2    $ 0.1445    $ 0.1445
    *Composite rate used to calculate 12/31/Y0 RE:            0.1387
1. Journal Entry Template
    Use this template to record journal entries to record the foreign currency intercompany transaction and related TechSmart hedging transaction. Remember, NONE of the entries have been recorded in the financial statements (not even the original sale entry). Refer to your slides and lectures related to foreign currency hedging (particularly the example video) to help you solve this problem.
    TechSmart Journal Entries:
    Date    Account name*        Debit    Credit        Notes
    11/10/Y1    Sales        $1,771,960            To record the sale (ignore the related COGS)
        Accounts receivable - Yuan            $1,771,960
    11/10/Y1    No Journal Entry needed                    To record the hedge
    12/31/Y1    Accounts receivable - Yuan        $8,680            To record the asset at FV at year end*
        Foreign exchange gain/loss - NI            $8,680
    12/31/Y1    Forward contract asset/liability        $6,200            To record the hedge instrument at FV at year end**
        Foreign exchange gain/loss - NI            $6,200
    *Suggested account names:                Inputs needed for journal entry amounts:
        Accounts receivable - Yuan            *Record change in market value of A/R
        Sales                Updated value of A/R, 12/31/Y1:            1780640
        Foreign exchange gain/loss - NI                Change:            $8,680
        Forward contract asset/liability            **Record forward contract at market value                6200
                        Change in forward contract FV:            $6,179.65
    *Note that no amortization is required for this forward contract because the spot rate and exchange rates are the same on the date of contract issuance.
2. Updated TS FS
    Copy and paste the original Tech Smart parent-only financial statement accounts here, then populate the numbers by...