On May 1, 20X0, Samual Company, a U.S. corporation, purchased minerals from a Japanese company for 4,000,000 yen, payable in 3 months. Samual Company has a June 30th fiscal year end. The relevant exchange rates between the U.S. and Japanese currencies are given:

Spot rate Forward rate (at Aug. 1, 20X0)

May 1, 20X0 $0.696 $0.696

June 30, 20X0 $0.718 $0.704

August 1, 20X0 $0.688

The company's incremental borrowing rate provides a discount rate of 0.975 for three months. Journalize the import purchase on May 1, 20X0. If Samual does not attempt to hedge this transaction, what is the gain or loss that should be shown on the company's June 30, 20X0 financial statements? Express your answer as an adjusting journal entry. Assume that on May 1, 20X0 Samual Company enters a forward contract to buy 4,000,000 yen on August 1, 20X0. What is the fair value of the forward contract at year-end closing on June 30, 20X0? If Samaul Company had instead opted to hedge their foreign currency exchange risk though a foreign currency option purchased on May 1, 20X0 at a premium of $0.004 per 10 yen, what gain or loss would be reported on the June 30, 20X0 financial statements if an option for similar risk was trading at $1,500?