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 $0.40 per Norwegian krone, Derby enters into a forward contract to purchase 590,000 Norwegian kroner at a three-month forward rate of $0.45. 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 $0.441 per Norwegian krone, Derby orders and receives the merchandise, paying 590,000 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? No 1 Date 03/01 No Journal Entry Required General Journal Debit Credit 2 05/31 Other Comprehensive Income (OCI) Forward Contract 3 05/31 Cost of Goods Sold 590,000 Other Comprehensive Income (OCI) 590,000 4 05/31 Foreign Currency (NOK) Forward Contract 5 05/31 Inventory Foreign Currency (NOK) 6 05/31 Cost of Goods Sold Inventory 7 05/31 Accumulated Other Comprehensive Income (AOCI) 590,000 x Cost of Goods Sold 590,000 What amount should Derby Corporation report in the current year's net income as cost of goods sold? Cost of goods sold $ 236,000