On June 1, Cairns Corporation purchased goods from a foreign supplier at a price of 1,400,000 francs and will make payment in three months on September 1. On June 1, Cairns acquired an option to purchase 1,400,000 francs in three months at a strike price of $0.797 Relevant exchange rates and option premiums for the franc are as follows Date June 1 June 30 September 1 Spot Rate 0.797 0.804 0.822 Call Option Premiunm for September 1 (strike price $0.797) 0.003 0.009 N/A Cairns must close its books and prepare its second-quarter financial statements on June 30. a-1. Assuming that Cairns designates the foreign currency option as a cash flow hedge of a foreign currency payable, prepare journal a-2. What is the impact on net income over the two accounting periods? entries for these transactions in U.S. dollars b-1. Assuming that Cairns designates the foreign currency option as a fair value hedge of a foreign currency payable, prepare journal entries for these transactions in U.S. dollars b-2. What is the impact on net income over the two accounting periods? Complete this question by entering your answers in the tabs below Req A1 Req A2 Req B1 Req B2 Assuming that Cairns designates the foreign currency option as a cash flow hedge of a foreign currency payable, prepare journal entries for these transactions in U.S. dollars. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet