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{.}10$ per Norwegian krone, Derby enters into a forward contract to purchase $500,000$ Norwegian

kroner at a three$-$month forward rate of $$0\mathrm{.}12.$ 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{.}115$ per

Norwegian krone, Derby orders and receives the merchandise, paying $500,000$ 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?

$1$ Record the entry to recognize the order to be made by

the company from a supplier in Norway in three months.

$2$ Record the entry to recognize forward contract as a$($n$)$

asset or liability.

$3$ Record the entry to recognize the forward contract

premium or discount.

$4$ Record settlement of the forward contract and record the

foreign currency received.

$5$ Record the purchase of inventory.

$6$ Record COGS when inventory is sold.

$7$ Record the entry to close the amount in AOCI related to

the forward contract.