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Questions 2 1 - 2 7 use the same facts, listed below and repeated for each question: On Nov. 1 , 2 0 x 1

Questions 21-27 use the same facts, listed below and repeated for each question:
On Nov. 1,20x1, TasteeFood Co., a U.S. company, purchased and received 15 tons of assorted dried peppers from Ola Co. which is
Iocated in Mexico. The peppers cost a total of 100 million pesos but TasteeFood does not plan to pay the related payable until Feb.
1,202.
TasteeFood is concerned that pesos may increase in value so decided on Nov. 1,20x1 to hedge using a forward contract, with a
forward price of $0.047? peso. Some rates are:
Q24: Make any journal entries needed on 12/31/20x1(a reporting date) for anything related to the purchase and forward. Use that
entry or entries to answer this question: What is the total effect of any entries needed on Dec 31,20x1 on Net Income?
(A) $200,000 decrease
$400,000 increase
$400,000 decrease
$200,000 increase
None of the above
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