Pumped Up company purchased equipment from Switzerland for 140,000 frances on December 16,20X7, with payment due on February 14, 20X8. On December 16, 20X7, Pumped Up also acquired a 60-day forward contract to purchase francs at a forward rate of SFr 1 = $0.67. On December 31, 20X7, the forward rate for an exchange on February 14, 20X8, is SFr. 1= $0.695. The spot rates were December 16,20X7. 1SFr= $0.68 December 31, 20X7 1SFr= 0.70 February 14, 20X81 SFr= 0.69 a. Entries: Date 12/16/X7 Hedged Item Hedging Instrument: Cash Flow Hedge *Com (for inventory purchase show work below!) (for entering the FW contract, explain or show work below!) 12/31/X7 (for year-end adjustment, show work below!) (for year-end adjustment, show work below!) (to offset FC TX G/L on hedged item) 2/14/X8 (to revalue A/P (SFr), show work below! (to revalue forward contract, show work below! (to offset FC TX G/L on hedged item) (to pay off A/P (SFr), show work below!) (to exercise forward contract. show work below!) 3/1/X8 (to record sale of inventory, show work below!) b. Foreign currency transaction gain/loss to be reported in Pumped Up's 20x7 income statement = Explain: c. Foreign currency transaction gain/loss to be reported in Pumped Up's 20x8 income statement = Explain: d. Gross profit to be reported in Pumped Up's 20x8 income statement = Show work: e. Overall effect of these transactions on Pumped Up's net income in 20X7 and 20x8, combined = Show work: Hint: Overall effect on net income should be the same as your aswer for question "f" in Part I because at the "end", nothing is deferred in OCI. All gains or losses are realized. 11