On June $1,$ Maxwell Corporation $($a U$.$S$.-$based company$)$ sold goods to a foreign customer at a price of $1,070,000$ pesos and

will receive payment in three months on September $1.$ On June $1,$ Maxwell acquired an option to sell $1,070,000$ pesos in three

months at a strike price of $$0\mathrm{.}070.$ The time value of the option is excluded from the assessment of hedge effectiveness, and

the change in time value is recognized in net income over the life of the option. Relevant exchange rates and option premia

for the peso are as follows:

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

Required:

a$-1.$ Assuming that Maxwell designates the foreign currency option as a cash flow hedge of a foreign currency receivable,

prepare journal entries for the export sale and related hedge in U$.$S$.$ dollars.

a$-2.$ What is the impact on net income over the two accounting periods?

b$-1.$ Assuming that Maxwell designates the foreign currency option as a fair value hedge of a foreign currency receivable,

prepare journal entries for the export sale and related hedge in U$.$S$.$ dollars.

b$-2.$ What is the impact on net income over the two accounting periods?