Crystal Exporting Co. is a U.S. wholesaler engaged in foreign trade. The following transactions are representative of its business dealings. The company uses a periodic inventory system and is on a calendar-year basis. All exchange rates are direct quotations.

Dec. 1		Crystal Exporting purchased merchandise from Chang's Ltd., a Hong Kong manufacturer. The invoice was for 210,000 Hong Kong dollars, payable on April 1. On this same date, Crystal Exporting acquired a forward contract to buy 210,000 Hong Kong dollars on April 1 for $0.1314.
Dec. 29		Crystal Exporting sold merchandise to Zintel Retailers for 120,000 Hong Kong dollars, receivable in 90 days. No hedging was involved.
April 1		Crystal Exporting received 120,000 Hong Kong dollars from Zintel Retailers.
April 1		Crystal Exporting submitted full payment of 210,000 Hong Kong dollars to Chang's, Ltd., after obtaining the 210,000 Hong Kong dollars on its forward contract.

Spot rates and the forward rates for the Hong Kong dollar were as follows:

		Spot Rate		Forward Rate for April 1 Delivery
Dec. 1		$0.1265		$0.1314
Dec. 29		0.1240		0.1305
Dec. 31		0.1259		0.1308
April 1		0.1430

The journal entries for the transactions including the adjustments on December 31 as below.

Date		Account Titles and Explanation	Debit		Credit
Dec. 1		Purchases	26,565
		Accounts Payable (210,000 $.1265)			26,565
Dec. 1		FC Receivable from Exchange Dealer	27,594
		Dollars Payable to Exchange Dealer (210,000 $.1314 = $27,594)			27,594
Dec. 29		Accounts Receivable (120,000 $.1240)	14,880
		Sales			14,880
Dec. 31		Accounts Payable	126
		Transaction Gain [(210,000 $.1259 = $26,439) - $26,565]			126
Dec. 31		Transaction Loss	126
		FC Receivable from Exchange Dealer [(210,000 $.1308 = $27,468) - $27,594]			126
Dec. 31		Accounts Receivable	228
		Transaction Gain [(120,000 $.1259 = $15,108) - $14,880]			228
Apr. 1		Cash (120,000 .1430)	17,160
		Accounts Receivable			15,108
		Transaction Gain			2,052
Apr. 1		Transaction Loss	3,591
		Accounts Payable [(210,000 $.1430 = $30,030) - $26,439]			3,591
Apr. 1		FC Receivable from Exchange Dealer	2,562
		Transaction Gain (210,000 $.1430 = $30,030 - $27,468]			2,562
Apr. 1		Investment in FC	30,030
		Dollars Payable to Exchange Dealer	27,594
		Cash			27,594
		FC Receivable from Exchange Dealer			30,030
Apr. 1		Accounts Payable	30,030
		Investment in Foreign Currency			30,030

(b) Explain the income statement treatment given to any transaction gains and losses recognized at December 31.