On November $1,2023,$ Cheng Company $($a U$.$S$.-$based company$)$ forecasts the purchase of goods from a foreign supplier for $140,000$

yuan. Cheng expects to receive the goods on April $30,2024,$ and make immediate payment. On November $1,2023,$ Cheng enters into

a six$-$month forward contract to buy $140,000$ yuan. The company properly designates the forward contract as a cash flow hedge of a

forecasted foreign currency transaction. Forward points are excluded in assessing hedge effectiveness and are amortized to net

income using a straight$-$line method on a monthly basis over the life of the contract. The following U$.$S$.$ dollar$-$Yuan exchange rates

apply:

As expected, Cheng receives goods from the foreign supplier on April $30,2024,$ and pays $140,000$ yuan immediately. Cheng sells the

imported goods in the local market in May $2024.$

Required:

a$.$ Prepare all journal entries, including December $31$ adjusting entries, to record the foreign currency forward contract and import

purchase.

b$.$ What is the impact on net income in $2023?$

c$.$ What is the impact on net income in $2024?$

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

Prepare all journal entries, including December $31$ adjusting entries, to record the foreign currency forward contract and import

purchase.

Note: Do not round intermediate calculations. 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 forecasted sale and the six$-$month forward contract to buy $140,000$

yuan.

Note: Enter debits before credits.