$7$B$-$ Pacifico Company, a U$.$S$.-$based importer of beer and wine, purchased $1,700$ cases of Oktoberfest$-$style beer from a German supplier for $459,000$ euros. Relevant U$.$S$.$ dollar exchange rates for the euro are as follows:

Date Spot Rate Forward Rate to October $15$ Call Option Premium for October $15($strike price $$1\mathrm{.}35)$

August $15$ $ $1\mathrm{.}35$ $ $1\mathrm{.}41$ $ $0\mathrm{.}05$

September $301\mathrm{.}401\mathrm{.}440\mathrm{.}06$

October $151\mathrm{.}431\mathrm{.}43($spot$)$ N$/$A

The company closes its books and prepares third$-$quarter financial statements on September $30.$

b$.$Assume that the beer arrived on August $15,$ and the company made payment on October $15.$ On August $15,$ the company entered into a two$-$month forward contract to purchase $459,000$ euros. The company designated the forward contract as a cash flow hedge of a foreign currency payable. Forward points are excluded in assessing hedge effectiveness and amortized to net income using a straight$-$line method on a monthly basis. Prepare journal entries to account for the import purchase and foreign currency forward contract.

$2.$Record entry for the forward contract entered into.

$3.$Record the entry to adjust the value of the euros to the new spot rate.

$4.$Record the adjustment to the forward contract to fair value.

$5.$Record a foreign exchange loss on the forward contract to offset the foreign exchange gain on the accounts payable.

$6.$Record the foreign exchange loss for the third quarter.

$7.$Record the entry for gain or loss on the forward contract on the payment date when the spot exchange rate is $$1\mathrm{.}43$ per Euro.

$8.$Record the change in the fair value of the forward contract on October $15$ when the spot rate is $$1\mathrm{.}43$ per Euro.

$9.$Record a foreign exchange loss on the forward contract to offset the foreign exchange gain on the accounts payable.

$10.$Record the foreign exchange loss for the fourth quarter.

$11.$Record purchase of foreign currency to make payment to German supplier.

$12.$Record payment made to German supplier on October $15$ when the spot rate is $$1\mathrm{.}43$ per Euro.