On June 1, Maxwell Corporation (a U.S.-based company) sold goods to a foreign customer at a price of 1,340,000 pesos and will receive payment in three months on September 1. On June 1, Maxwell acquired an option to sell 1,340,000 pesos in three months at a strike price of $0.098. 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: Date June 1 June 30 September 1 Spot Rate $ 0.098 0.097 0.096 Put Option Premium for September 1 (strike price $0.098) $ 0.0061 0.0040 N/A Maxwell must close its books and prepare its second-quarter financial statements on June 30. 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? No Date General Journal Debit Credit 1 06/01 Accounts receivable (P) 131,320 Sales 131,320 2 06/01 8,174 Foreign currency option Cash 8,174 06/30 1,340 Foreign exchange gain or loss Accounts receivable (P) 1,340 4 06/30 Other comprehensive income Foreign currency option 5 06/30 Other comprehensive income Foreign exchange gain or loss 6 06/30 Foreign exchange gain or loss Other comprehensive income >> 7 09/01 Foreign exchange gain or loss Accounts receivable (P) 8 09/01 Other comprehensive income Foreign currency option 9 09/01 Other comprehensive income Foreign exchange gain or loss 10 09/01 Foreign exchange gain or loss Other comprehensive income 11 09/01 Foreign currency (P) Accounts receivable (P) 12 09/01 Cash Foreign currency option Foreign currency (P) Req A1 Req A2 Req B1 Req B2 What is the impact on net income over the two accounting should be entered with a minus sign.) Impact on net income Req A1 Req A2 Req B1 Req B2 Assuming that Maxwell designates the foreign currency option as a fair value hedge of a foreign currency receivable, journal entries for the export sale and related hedge in U.S. dollars. (Do not round intermediate calculations. If no ent required for a transaction/event, select "No journal entry required" in the first account field.) No General Journal Debit Credit Date 06/01 1 Accounts receivable (P) Sales 2 06/01 Foreign currency option Cash 3 06/30 Foreign exchange gain or loss Accounts receivable (P) 4 06/30 Foreign exchange gain or loss Foreign currency option 5 06/30 No journal entry required 6 06/30 No journal entry required 7 09/01 Foreign exchange gain or loss Accounts receivable (P) 8 09/01 Other comprehensive income Foreign currency option 9 09/01 Other comprehensive income Foreign exchange gain or loss 10 09/01 Foreign exchange gain or loss Other comprehensive income 11 09/01 Foreign currency (P) Accounts receivable (P) 12 09/01 Cash Foreign currency option Foreign currency (P) Req A1 Req A2 Req B1 Req B2 What is the impact on net income over the two accounting periods? (D should be entered with a minus sign.) Impact on net income