Based on past experlence, Maas Corporation $($a U$.$S$.-$based company$)$ expects to purchase raw materlals from a forelgn supplier at a

cost of $1,700,000$ francs on March $15,2024.$ To hedge this forecasted transaction, on December $15,2023,$ the company acquires a call

option to purchase $1,700,000$ francs in three months. Maas selects a strike price of $$0\mathrm{.}76$ per franc when the spot rate is $$0\mathrm{.}76$ and

pays a premlum of $$0\mathrm{.}001$ per franc. The spot rate increases to $$0\mathrm{.}763$ at December $31,2023,$ causing the falr value of the option to

Increase to $$6,000.$ By March $15,2024,$ when the raw materlals are purchased, the spot rate has climbed to $$0\mathrm{.}78,$ resulting in a falr

value for the option of $$34,000.$ The raw materlals are used in assembling finlshed products, which are sold by December $31,2024,$

when Maas prepares Its annual financial statements.

Requlred:

a$.$ Prepare all journal entrles for the optlon hedge of a forecasted transaction and for the purchase of raw materlals.

b$.$ What is the overall impact on net Income over the two accounting perlods?

c$.$ What is the net cash outflow to acquire the raw materlals?

Complete this question by entering your answers in the tabs below.

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

Note: If no entry is required for a transaction$/$event$,$ select $"$No Journal Entry Required" in the first account field.

Jnirnal antry unerkchept

Record purchase of foreign currency option as an asset.

Note: Enter debits before credits.