1. On June 1. Alexander Corporation sold goods to a foreign customer at a price of 1,000,000 pesos. It will receive pavment in three months on September I. On June 1. Alexander acquired an option to sell 1,000,000 pesos in three months at a strike price of $0.062. Relevant exchange rates and option premiums for the peso are as follows:

Dare

June 1

June 30

September 1

Spot Rate

$0.062

0.066

Put Option Premium for September 1

(strike price $0.062)

$0.0025

0.0018

N/A

Alexander must close its books and prepare its second-quarter financial statements on June 30.

Assuming that Alexander designates the foreign currency option as a cash flow hedge of a foreign currency receivable, prepare journal entries for these transactions in U.S. dollars

What is the impact on net income over the two accounting periods?