Velvet Vinos Company, a U.S.-based importer of wines, placed an order with a French supplier for 1,000 cases of wine at a price of 180 euros per case. The total purchase price is 180,000 euros. Relevant exchange rates for the euro are as follows: Velvet Vinos Company has an incremental borrowing rate of 12 percent (1 percent per month). The present value factor for one month is 0.9901 . The firm closes the books and prepares financial statements on December 31. Treat each scenario below independently. Show supporting calculations to get credit. a. (25 points) The wine arrived on November 1, 2022, and the company made payment on January 31, 2023. On November 1, Velvet Vinos purchased a call option to buy 180,000 euros at $1.10 per euro on January 31. It properly designated the option as a fair value hedge of a foreign currency payable. 1. Prepare journal entries to account for the transactions. 2. What is the net benefit of acquiring the option than leaving the transaction unhedged? b. (25 points) The company ordered the wine on November 1, 2022. It arrived on January 31, 2023, and the company paid for it on the same day. On November 1, Velvet Vinos purchased a call option to buy 180,000 euros at $1.10 per euro on January 31. It properly designated the option as a fair value hedge of a foreign currency firm commitment. Discounted present value will be used to assess the value of the firm commitment. 1. Prepare journal entries to account for the transactions