entries will be as follows DR (£) CR (£) Debtors 3,968,254 Sales 3,968,254 To record the sale of 5 million euros at the forward rate of $1.26 = $1 U.S dollar. After the end of the first month on the balance sheet date, no transaction with the debtor is recorded since the forward rate has been used. At the end of the agreed period, the journals that will be recorded to recognise receiving of the sales money will be as follows As at the date of settlement DR (£) CR (£) Cash 3,968,254 Debtors 3,968,254 To record the receipt of 5 million euros at the forward rate of $1.26 = $1 U.S. dollar. In this transaction, there is no difference that arises as the sale of goods in a foreign currency and forward contract are effectively treated as one transaction. Here the rate of $1.26 = $1 U.S dollar is used throughout the recording of both transactions. Accounting Treatment under the FRS 102 The FRS accounting procedure takes a different route of execution in treating the sale and the forward contract as two separate transactions According to section 30 of foreign currency translation, foreign exchange transaction should be recorded at the spot rate. The transactions are also recorded at the date of the transaction while the monetary items should be treated by translating them through the use of a closing rate at the balance sheet date. In this case, there is no use of a forward rate since any exchanges that arise at the balance sheet data on the settlements are recognised as either a profit or a loss (Ltd, 2017). However, the forward currency contracts are then recorded as other financial instruments as per the classification of FRS 102 and therefore accounted for in accordance with section 12 of other financial instruments (Parameswaran, 2011). Additionally, section 12 requires that the derivative contract to be recognised at the fair value, this is the section where the initial value should be recognised in the journal entries. Any changes that should appear in the fair value, it should be recognised as either a loss or a profit. Lastly, in a situation where the foreign currency contracts are part of a qualifying hedging arrangement, then they should be accounted as per the hedge accounting rules (Parameswaran, 2011). Using the provided information the accounting journal entries should be as follows; As at the date