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Question - On November 1, 2014 Portsmith Corporation, a calendar-year U.S. corporation, invested in a purely speculative contract to purchase 1 million yen on January 30, 2015, from the Karoke Trading Company, a Japanese brokerage firm. Portsmith agreed to purchase 1,000,000 yen from Karoke at a fixed price of $0.0100 per yen. Karaoke agreed to transit 1,000,000 yen to Portsmouth on January 30.

Net settlement is not permitted. The spot rates for yen are:

Nov 01, 2014 1 yen = $0.0097 Dec 31, 2014 1 yen = $0.0104 Jan 30, 2015 1 yen = $0.0106

The 30 day forward rate for yen on December 31, 2014 was $0.0104.

Required: Prepare the General Journal entries that Portsmith would record on November 1, December 31, and January 30.

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