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journal entry for fwd contract for hedging ??

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(Querist)
22 March 2011 i was solving problems on as-11. i got stuck in passing the journal entries having foreign exchange and foward contract to minimise exchange rate risk.

confusion was due to forward contract. also i did not understand what is forward premium.

someone please help my logically the journal entries for forward contract??

my id abhipcc@rediffmail.com
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CA Navin Jain

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CA Navin Jain (Expert)
22 March 2011 suppose we have booked a forward contract for three month dated 01.03.2011 on the @ Rs. 47.00 per dollar and spot rate on 01.03.2011 is RS. 46.70.

Spot Rate on 31.03.2010 Rs. 46.80

There will be forward premium of rs. .30.

Journal Entry.

01.03.2010

Forward contract Receivable Dr. 46.70
Deferred Premium Dr. .30
To Forward Contract Payable- Cr 47.00

31.03.2010

Premium on Forward Contract - Dr. .10
to Deferred Premium -Cr. .10

31.3.10

Forward contract Receivable Dr. .10
To gain on forward contract - Cr. .10
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