On November 2, 2016, Baz, a U.S. retailer, ordered merchandise from Mat of Japan. The merchandise is to be delivered to Baz on January 31, 2017, at a price of 1,000,000 yen. Also on November 2, Baz hedged the foreign currency commitment with Mat by contracting with its exchange broker to buy 1,000,000 yen for delivery on January 31, 2017. Exchange rates for yen are:

REQUIRED
1. Prepare the entry (or entries) on Baz's books on November 2, 2016.
2. Prepare the adjusting entry on December 31, 2016.

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11/2/16 12/31/16 1/31/17 Spot rate 30-day forward rate 90-day forward rate $0.0078 $0.0079 $0.0080 $0.0076 $0.0078 $0.0079 $0.0075 $0.0076 $0.0078