$1.$ On December $1,2023,$ Mojito Co$.$ sold inventory to a customer in a foreign country.$$ Mojito agreed to accept $200,000$ local currency units $($lcu$)$ in full payment for this inventory.$$ Payment was to be made on February $1,2024.$ On December $1,2023,$ Mojito purchases an option at a premium of $$\mathrm{.}035$ to sell $200,000$ LCU at a strike price of $$\mathrm{.}34$ on February $1,2024.$The spot rates and option premiums on various dates were as follows:

$$

Date$$ Rate Description$$ Exchange Rate

$12-1-23$ Spot rate$$ $$\mathrm{.}34=1$ lcu

$$ Option premium $$ $$\mathrm{.}035$

$12-31-23$ Spot rate$$ $$\mathrm{.}30=1$ lcu

$$ Option premium$$ $$\mathrm{.}04$

$2-1-24$ Spot rate$$ $$\mathrm{.}29=1$ lcu

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Required:

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$$ Assume that this hedge is designated as a cash flow hedge.$$ Prepare the journal entries relating to the transaction and the option.