On November 1, 2020, Talbots(a U.S.-based company) sold merchandise to a foreign customer for 350,000 Kenyan shillings (KES)with payment to be received on April 30, 2021. On the same day, Talbotsentered into a six-month forward contract to sell 350,000 KES. The company properly designates the forward contract as a cash flow hedge of a foreign currency receivable. The following exchange rates apply:

DateSpot RateForward Rate

(to April 30, 2020)November 1, 2020$0.46$0.45December 31, 20200.440.42April 30, 20210.43N/A

Talbots's incremental borrowing rate is 12 percent. The present value factor for four months at an annual interest rate of 12 percent (1 percent per month) is 0.9610.

1. Prepare
2. all journal entries, including December 31 adjusting entries, to record the sale and forward contract.
3. What is the impact on net income in 2020?
4. What is the impact on net income in 2021?