Option contract designated as a cash flow hedge of a forecasted foreign-currency-denominated sales transaction, strengthening $US On January 5, 2019, our company receives a nonbinding purchase order for sale of merchandise to a customer in Slovakia, with delivery of the merchandise scheduled for June 30, 2019. The customer preliminarily agreed to pay 700,000 for the merchandise, and payment is due from the customer upon delivery. On January 5, 2019, our company also purchases an option that gives our company the right to sell (i.e, put) 700,000 on any date until June 30, 2019 (1.e, it is an "American-style" option) for $1.29:1 (i.e., the spot rate on January 5, 2019). On January 5, 2019, the fair value of the option (i.e., the option premium) is $21,000. In addition, our company elected to immediately include in the determination of net income all of the change in option value attributable to factors excluded from the assessment of hedge effectiveness (ie, the non-intrinsic-value components, like time value). The relevant exchange rates and related balances for the period from January 5, 2019, to June 30, 2019, are as follows: Option Contract Change Change in Other Change in Fair Intrinsic Intrinsic Sources in Other Value 521,000 $21.0000 Mar. 31, 2019 47,600 $26,600 $35,000 $35.000 Jun 30, 2019 1.20 $840,000 63,000 15,400 63,000 (12,600) Derived from an option pricing model such as the Black-Scholes model (700,000 $1.29:61) - (700,000 $1.24:1) (700,000 $1.29:1) - (700,000 * 51.20:) Fair value - intrinsic value (i.e., equals the residual fair value derived from all sources except for intrinsic value) a. Prepare the journal entries to record all the adjustments required for the forecasted sale and option contract on January 5, 2019, March 31, 2019, and June 30, 2019. Note: If no entry is required, select "No entry" as your answers under Description and leave the debit and credit answers blank (zero). Hedged Transaction Description Value Value of Value Value Date Jan 5, 2019 Spot Rate Sale Fair (SUS-1) Transaction Value 1.29 1.24 12,600 $(8.400) 28,000 Debit Credit Date 1/5/19 0 0 0 3/31/19 e 0 0 . 6/30/19 e 0 0 0 0 . CE Hedge Note: Entries assume all of excluded option value change runs through income. Description Debit Credit Date CF Hedge Note: Entries assume all of excluded option value change runs through income. Date Description Debit Credit 1/5/19 e 0 0 0 0 3/31/19 0 0 0 0 To recognize change in fair value . 0 OO 0 To recognize change in other sources. 6/30/19 . . 0 0 O O To recognize change in fair value . 0 a Oo 0 To recognize change in other sources 0 . . 0 0 0 To record net settlement 0 . . O I 0 0 To record reclassification c. What amount of sales was recognized in the quarter ending March 31, 2019? $ 0 What amount of sales was recognized in the quarter ending June 30, 2019? $ 0 What is the total amount of sales recognized across the quarters ending March 31 and June 30, 2019? $ 0 Please answer all parts of the question. Option contract designated as a cash flow hedge of a forecasted foreign-currency-denominated sales transaction, strengthening $US On January 5, 2019, our company receives a nonbinding purchase order for sale of merchandise to a customer in Slovakia, with delivery of the merchandise scheduled for June 30, 2019. The customer preliminarily agreed to pay 700,000 for the merchandise, and payment is due from the customer upon delivery. On January 5, 2019, our company also purchases an option that gives our company the right to sell (i.e, put) 700,000 on any date until June 30, 2019 (1.e, it is an "American-style" option) for $1.29:1 (i.e., the spot rate on January 5, 2019). On January 5, 2019, the fair value of the option (i.e., the option premium) is $21,000. In addition, our company elected to immediately include in the determination of net income all of the change in option value attributable to factors excluded from the assessment of hedge effectiveness (ie, the non-intrinsic-value components, like time value). The relevant exchange rates and related balances for the period from January 5, 2019, to June 30, 2019, are as follows: Option Contract Change Change in Other Change in Fair Intrinsic Intrinsic Sources in Other Value 521,000 $21.0000 Mar. 31, 2019 47,600 $26,600 $35,000 $35.000 Jun 30, 2019 1.20 $840,000 63,000 15,400 63,000 (12,600) Derived from an option pricing model such as the Black-Scholes model (700,000 $1.29:61) - (700,000 $1.24:1) (700,000 $1.29:1) - (700,000 * 51.20:) Fair value - intrinsic value (i.e., equals the residual fair value derived from all sources except for intrinsic value) a. Prepare the journal entries to record all the adjustments required for the forecasted sale and option contract on January 5, 2019, March 31, 2019, and June 30, 2019. Note: If no entry is required, select "No entry" as your answers under Description and leave the debit and credit answers blank (zero). Hedged Transaction Description Value Value of Value Value Date Jan 5, 2019 Spot Rate Sale Fair (SUS-1) Transaction Value 1.29 1.24 12,600 $(8.400) 28,000 Debit Credit Date 1/5/19 0 0 0 3/31/19 e 0 0 . 6/30/19 e 0 0 0 0 . CE Hedge Note: Entries assume all of excluded option value change runs through income. Description Debit Credit Date CF Hedge Note: Entries assume all of excluded option value change runs through income. Date Description Debit Credit 1/5/19 e 0 0 0 0 3/31/19 0 0 0 0 To recognize change in fair value . 0 OO 0 To recognize change in other sources. 6/30/19 . . 0 0 O O To recognize change in fair value . 0 a Oo 0 To recognize change in other sources 0 . . 0 0 0 To record net settlement 0 . . O I 0 0 To record reclassification c. What amount of sales was recognized in the quarter ending March 31, 2019? $ 0 What amount of sales was recognized in the quarter ending June 30, 2019? $ 0 What is the total amount of sales recognized across the quarters ending March 31 and June 30, 2019? $ 0 Please answer all parts of the