Clues is a US-based company and often enters into foreign transactions in Japan. On December 10^th, 2021, Clues sells merchandise on account to a customer in Japan for 3,000,000 Japanese yen with payment due January. 10^th, 2021. On December 10^th, 2021, Clues also enters into a forward contract to sell 3,0000,000 yen to a broker for USD on January 10^th, at todays forward rate. The relevant spot rates are given below. Clues has a December 31^st year-end.

Assume that Clues identifies this derivative as a fair value hedge, and they correctly record the sale and the derivative on December 10^th.

1. What journal entries does Clues make on December 31^st? (please indicate whether an account is foreign currency. Also, indicate if gains/losses are net income or OCI)

Date Dec. 10 Dec. 31 Jan. 10 Forward Rate Spot Rate for Jan. 10 0.008 0.0082 0.0078 0.0081 0.0085 Date Dec. 10 Dec. 31 Jan. 10 Forward Rate Spot Rate for Jan. 10 0.008 0.0082 0.0078 0.0081 0.0085