Based on past experience, Maas Corporation $($a U$.$S$.-$based company$)$ expects to purchase raw materlals from a forelgn supplier at a

cost of $1,400,000$ francs on March $15,2024.$ To hedge this forecasted transaction, on December $15,2023,$ the company acquires a call

option to purchase $1,400,000$ francs in three months. Maas selects a strike price of $$0\mathrm{.}73$ per franc when the spot rate is $$0\mathrm{.}73$ and

pays a premlum of $$0\mathrm{.}003$ per franc. The spot rate increases to $$0\mathrm{.}733$ at December $31,2023,$ causing the falr value of the option to

Increase to $$7,500.$ By March $15,2024,$ when the raw materials are purchased, the spot rate has climbed to $$0\mathrm{.}75,$ resulting in a fair

value for the option of $$28,000.$ The raw materials are used in assembling finished products, which are sold by December $31,2024.$

when Maas prepares its annual financlal statements.

Required:

a$.$ Prepare all journal entries for the option hedge of a forecasted transaction and for the purchase of raw materlals.

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 materlals?

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?

Note: Negative amounts should be entered with a minus sign.

c$.$ What is the net cash outflow to acquire the raw materials?