Spindler, Inc. (a U.S.-based company), imports surfboards from a supplier in Brazil and sells them in the United States. Purchases are denominated in terms of the Brazilian real (BRL). During 2020, Spindler acquires 390 surfboards at a price of BRL 1,600 per surfboard, for a total of BRL 624,000.00. Spindler will pay for the surfboards when it sells them. Relevant exchange rates are as follows: U.S. Dollar per Brazilian Real Date (BRL) September 1, 2020 $0.240 December 1, 2020 0.230 December 31, 2020 March 1, 2021 0.250 0.235 a. Assume that Spindler acquired the surfboards on September 1, 2020, and made payment on December 1, 2020. What is the effect of the exchange rate fluctuations on reported income in 2020? b. Assume that Spindler acquired the surfboards on December 1, 2020, and made payment on March 1, 2021. What is the effect of the exchange rate fluctuations on reported income in 2020 and 2021? c. Assume that Spindler acquired the surfboards on September 1, 2020, and made payment on March 1, 2021. What is the effect of the exchange rate fluctuations on reported income in 2020 and in 2021? (Input all amounts as positive values.) Effect of Exchange Rate Fluctuations a. 2020 b. 2020 2021 C. 2020 2021 Based on past experience, Maas Corp. (a U.S.-based company) expects to purchase raw materials from a foreign supplier at a cost of 1,600,000 francs on March 15, 2021. To hedge this forecasted transaction, on December 15, 2020, the company acquires a call option to purchase 1,600,000 francs in three months. Maas selects a strike price of $0.75 per franc when the spot rate is $0.75 and pays a premium of $0.005 per franc. The spot rate increases to $0.755 at December 31, 2020, causing the fair value of the option to increase to $15,000. By March 15, 2021, when the raw materials are purchased, the spot rate has climbed to $0.77, resulting in a fair value for the option of $32,000. The raw materials are used in assembling finished products, which are sold by December 31, 2021, when Maas prepares its annual financial statements. a. Prepare all journal entries for the option hedge of a forecasted transaction and for the purchase of raw materials. b. What is the overall impact on net income over the two accounting periods? c. What is the net cash outflow to acquire the raw materials? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req A Req B and C Prepare all journal entries for the option hedge of a forecasted transaction and for the purchase of raw materials. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No 1 Date 12/15/2020 General Journal Debit Credit Foreign currency option 8,000 Cash 8,000 2 12/15/2020 No journal entry required 3 12/31/2020 Foreign currency option Other comprehensive income 7,000 7,000 4 12/31/2020 Cost of goods sold Other comprehensive income >> 1,000 1,000- 5 03/15/2021 Foreign currency option 17,000 Other comprehensive income 17,000 6 03/15/2021 Cost of goods sold 17,000 Other comprehensive income 17,000 x 7 03/15/2021 Foreign currency (francs) Cash Foreign currency option 1,232,000 1,200,000 32,000 8 03/15/2021 Raw materials inventory Foreign currency (francs) 1,232,000 1,232,000 9 03/15/2021 Accumulated other comprehensive income 32,000 Cost of goods sold 32,000 10 03/15/2021 Cost of goods sold 1,200,000 x Raw materials inventory 1,200,000 < Req A Req B and C > Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req A Req B and C b. What is the overall impact on net income over the two accounting periods? (Negative amounts should be entered with a minus sign.) c. What is the net cash outflow to acquire the raw materials? Impact on Net Income b. Impact on net income in 2020 $ (1,000) Impact on net income in 2021 $ (1,215,000) C. Net cash outflow S 1,216,000 x < ReqA Req B and C >