Option contract designated as a cash flow hedge of a forecasted foreign-currency-denominated sales transaction, strengthening sus On January 5, 2022, our company receives a nonbinding purchase order far sale of merchandise to a customer in 5 lovakla, with delivery of the merchandise scheduled for June 30 , 2022 . The customer preliminarily agreed to pay 600,000 for the merchandise, and payment is due from the customer upon telivery. On January 5,2022 , our company also purchases an option that gives our company the right to sell (i.e., put) 600,000 on any date until June 30, 2022 (..e., it is an "American-style" option) for 51.30:1 (i.e., the spot rate on January 5,2022). On January 5, 2022, che fair value of the option (i.e., the option premium) is 518,000 . In addition, our compary elected to immediately include in the dietermination of net income all of the change in option value attributable to factors excluded from the assessment of hedge effectiveness ( L.e., the non-intrinsic-value components, like time value). The relevant exchange rates and related balances for the period trom January 5 , 2022. to lune 30 , 2022, are as follows: a Derived from an option pricing model such as the Black-5choles model b(600,000$1.30:1)(600,000$1.25.1) c (600,000$1.30:E1){600,000$1.21:1} d. Fair value - intrinsic value (i.e., equals the residual fair value derived from all sources except for intrinsic value [e.g. time value]) a. Prepare the journal entries to record all the adjustments required for the forecasted sale and option concract on january 5, 2022, March 31,2022 , and June 30,2022 . Note: If no journal entry is required, select No entry - debit and No entry - credit as your Account answers and leave the Debit and Credit amounts blank (zero). a. Prepare the journal entries to record all the adjustments required for the forecasted sale and option contract on january 5, 2022, March 31 , 2022, and june 30, 2022. Note: If no journal entry is required, select No entry - debit and No entry - credit as your Account answers and leave the Debit and Credit amounts blank (zero). Hedged Transaction \begin{tabular}{|l|c|} \hline Date & Account \\ \hline 5-jan-22 & Debit \\ \hline (Option recorded at fair value) \\ \hline 31-Mar-22 & \\ \hline (to recognize the change in the fair yalue of the cotion) \\ \hline \end{tabular} CF Hedge: Entries assuming all of excluded option value change runs through income re Harloa. Entries aesumine excluded option value amortized through income CF Hedge: Entries assuming excluded option value amortized through income b. What amount of sales was recognized in the quarter ending March 31, 2022? What amount of sales was recognized in the quarter ending June 30,2022? Note: Use negative signs with your answers, when appropriate. Option contract designated as a cash flow hedge of a forecasted foreign-currency-denominated sales transaction, strengthening sus On January 5, 2022, our company receives a nonbinding purchase order far sale of merchandise to a customer in 5 lovakla, with delivery of the merchandise scheduled for June 30 , 2022 . The customer preliminarily agreed to pay 600,000 for the merchandise, and payment is due from the customer upon telivery. On January 5,2022 , our company also purchases an option that gives our company the right to sell (i.e., put) 600,000 on any date until June 30, 2022 (..e., it is an "American-style" option) for 51.30:1 (i.e., the spot rate on January 5,2022). On January 5, 2022, che fair value of the option (i.e., the option premium) is 518,000 . In addition, our compary elected to immediately include in the dietermination of net income all of the change in option value attributable to factors excluded from the assessment of hedge effectiveness ( L.e., the non-intrinsic-value components, like time value). The relevant exchange rates and related balances for the period trom January 5 , 2022. to lune 30 , 2022, are as follows: a Derived from an option pricing model such as the Black-5choles model b(600,000$1.30:1)(600,000$1.25.1) c (600,000$1.30:E1){600,000$1.21:1} d. Fair value - intrinsic value (i.e., equals the residual fair value derived from all sources except for intrinsic value [e.g. time value]) a. Prepare the journal entries to record all the adjustments required for the forecasted sale and option concract on january 5, 2022, March 31,2022 , and June 30,2022 . Note: If no journal entry is required, select No entry - debit and No entry - credit as your Account answers and leave the Debit and Credit amounts blank (zero). a. Prepare the journal entries to record all the adjustments required for the forecasted sale and option contract on january 5, 2022, March 31 , 2022, and june 30, 2022. Note: If no journal entry is required, select No entry - debit and No entry - credit as your Account answers and leave the Debit and Credit amounts blank (zero). Hedged Transaction \begin{tabular}{|l|c|} \hline Date & Account \\ \hline 5-jan-22 & Debit \\ \hline (Option recorded at fair value) \\ \hline 31-Mar-22 & \\ \hline (to recognize the change in the fair yalue of the cotion) \\ \hline \end{tabular} CF Hedge: Entries assuming all of excluded option value change runs through income re Harloa. Entries aesumine excluded option value amortized through income CF Hedge: Entries assuming excluded option value amortized through income b. What amount of sales was recognized in the quarter ending March 31, 2022? What amount of sales was recognized in the quarter ending June 30,2022? Note: Use negative signs with your answers, when appropriate
