Based on past experience, Maas Corp. $($a U$.$S$.-$based company$)$ expects to purchase raw materials from a foreign supplier at a cost of $1,200,000$ francs on March $15,2021.$ To hedge this forecasted transaction, on December $15,2020,$ the company acquires a call option to purchase $1,200,000$ francs in three months. Maas selects a strike price of $$0\mathrm{.}60$ per franc when the spot rate is $$0\mathrm{.}60$ and pays a premium of $$0\mathrm{.}002$ per franc. The spot rate increases to $$0\mathrm{.}606$ at December $31,2020,$ causing the fair value of the option to increase to $$9,000.$ By March $15,2021,$ when the raw materials are purchased, the spot rate has climbed to $$0\mathrm{.}62,$ resulting in a fair value for the option of $$24,000.$ The raw materials are used in assembling finished products, which are sold by December $31,2021,$ when Maas prepares its annual financial statements.

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$*$ Prepare all journal entries for the option hedge of a forecasted transaction and for the purchase of raw materials.

$*$ What is the overall impact on net income over the two accounting periods?

$*$ What is the net cash outflow to acquire the raw materials?

PLEASE RECORD THE FOLLOWING JOURNAL ENTRIES

$1.12/15/2020-$ Record purchase of foreign currency option as an asset

$2.12/15/2020-$ Record entry for order placed with foreign supplier

$3.12/31/2020-$ Record the entry to recognize the increase in the value of the foreign currency option

$4.12/31/2020-$ Record entry to recognize the decrease in the time value of the option as an increase in cost of goods sold

$5.03/15/2021-$ Record the entry to recognize the increase in the value of the foreign currency option

$6.03/15/2021-$ Record entry to recognize the decrease in the time value of the option as an increase in cost of goods sold

$7.03/15/2021-$ Record the exercise of foreign currency option

$8.03/15/2021-$ Record the purchase of inventory

$9.03/15/2021-$ Record entry to transfer the amount accumulated in AOCI

$10.03/15/2021-$ Record entry to transfer the cost of the raw materials to cost of goods sold