International Accounting Question: Zorba Company, a U.S.-based importer of specialty olive oil, placed an order with a foreign supplier for 500 cases of olive oil at a price of 100 crowns per case. The total purchase price is 50,000 crowns. Relevant exchange rates are as follows:

Date	Spot Rate	Forward Rate (to January 31, Year 2)	Call Option Premium for January 31, Year 2 (strike price $1.00)
December 1st yr 1	$1.00	$1.08	$0.04
December 31st yr1	$1.10	$1.17	$0.17
January 31st yr2	$1.15	$1.15	$0.15

Zorba Company has an incremental borrowing rate of 12 percent (1 percent per month) and closes the books and prepares financial statements on December 31.

Required: The olive oil was received on December 1, Year 1, and payment was made on January 31, Year 2. On December 1, Zorba Company purchased a two-month call option for 50,000 crowns. The option was properly designated as a cash flow hedge of a foreign currency payable. Prepare journal entries to account for the import purchase and foreign currency option.