Brandlin Company purchases materials from a foreign supplier on December 1, 2015, with payment of 20,000 korunas to be made on March 1, 2016. The materials are consumed immediately and recognized as cost of goods sold at the date of purchase. On December 1, 2015, Brandlin enters into a forward contract to purchase 20,000 korunas on March 1, 2016. Relevant exchange rates for the koruna on various dates are as follows:

Date	Spot Rate		Forward Rate (to March 1, 2014)
December 1, 2015	$	3.10	$	3.175
December 31, 2015		3.20		3.300
March 1, 2016		3.35		N/A

Brandlins incremental borrowing rate is 12 percent. The present value factor for two months at an annual interest rate of 12 percent (1 percent per month) is 0.9803. Brandlin must close its books and prepare financial statements at December 31.

a-1.

Assuming that Brandlin designates the forward contract as a cash flow hedge of a foreign currency payable and recognizes any premium or discount using the straight-line method, prepare journal entries for these transactions in U.S. dollars. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your answers to 2 decimal places.)

a-2.	Assuming that the purchased parts became a part of the cost of goods sold in 2015, what is the impact on 2015 net income? (Do not round intermediate calculations.)

a-3.	What is the impact on 2016 net income? (Do not round intermediate calculations.)

a-4.	What is the impact on net income over the two accounting periods? (Do not round intermediate calculations.)

b-1.	Assuming that Brandlin designates the forward contract as a fair value hedge of a foreign currency payable, prepare journal entries for these transactions in U.S. dollars. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your answers to 2 decimal places.)

b-2.	Assuming that the purchased parts became a part of the cost of goods sold in 2015, what is the impact on net income in 2015 and in 2016? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

b-3.	What is the impact on net income over the two accounting periods? (Do not round intermediate calculations.)