On March $1,$ Derby Corporation $($a U$.$S$.-$based company$)$ expects to order merchandise from a supplier in Norway in three months. On March $1,$ when the spot rate is $$0\mathrm{.}09$ per Norwegian krone, Derby enters into a forward contract to purchase $602,500$ Norwegian kroner at a three$-$month forward rate of $$0\mathrm{.}10.$ Forward points are excluded in assessing the forward contract's effectiveness as a hedge, and are amortized to net income on a straight$-$line basis. At the end of three months, when the spot rate is $$0\mathrm{.}098$ per Norwegian krone, Derby orders and receives the merchandise, paying $602,500$ kroner. The merchandise is sold within $30$ days.

Required:

a$-1.$ Prepare all journal entries for Derby Corporation related to this transaction and hedge.

a$-2.$ What amount should Derby Corporation report in the current year's net income as cost of goods sold?

b$.$ What amount should Derby Corporation report in the current year's net income as foreign exchange gain or loss?

Complete this question by entering your answers in the tabs below.

Req A$1$

Prepare all journal entries for Derby Corporation related to this transaction and hedge.

Note: If no entry is required for a transaction$/$event$,$ select $"$No Journal Entry Required" in the first account field.

Journal entry worksheet

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Record the entry to recognize the order to be made by the company from a supplier in Norway in three months.

Note: Enter debits before credits.