Branch Company, a USA-based company, sells widgets to a foreign customer, Tiko, on June 1, 2014, on account. Tiko will pay 25,000 liras for the widgets on September 1, 2014.

Branch enters into a forward contract on June 1, 2014, to sell 25,000 liras on September 1, 2014.

Branch's incremental borrowing rate is 12%. The present value factor for two months at an annual interest rate of 12% is 0.9803.

Branch must close the books and prepare financial statements at the end of every quarter.

June 1, 2014	$3.10	$3.155
June 30, 2014	$3.20	$3.30
August 1, 2014	$3.45	N/A

Using the data provided, prepare the necessary journal entries for the following:

1. A cash flow hedge.
2. A fair value hedge.