On December 1, Year 1, Elon Electronics, a U.S.-based importer of capacitors, placed an order with an Illyrian-based supplier for 20,000 capacitors at a price of 50 Illyrian florins per capacitor; the total purchase price is 1,000,000 florins. The foreign supplier shipped the capacitors to Elon on December 1, Year 1, and Elon paid the Illyrian supplier in florins on February 28, Year 2.

On December 1, Elon purchased a three-month call option to purchase 1,000,000 florins on February 28, Year 2. Elon properly designated the call option as a cash flow hedge of a foreign currency payable. Elons fiscal year ends on December 31.

Relevant exchange rates and call option premiums are as follows:

Date	Spot Rate	Call Option Premium for February 28, Year 2 (strike price $0.095/florin)
December 1, Year 1	$0.095/florin	$0.008
December 31, Year 1	$0.099/florin	$0.010
February 28, Year 2	$0.093/florin	-

Required:

Prepare all journal entries related to these transactions, in U.S. dollars.