On March $1,$ Derby Corporation $($a U$.$S$.-$based company$)$ expects to order merchandise from a suppller in Norway in three months. On March $1,$ when the spot rate is $$0\mathrm{.}16$ per Norwegian krone, Derby enters into a forward contract to purchase $670,000$ Norwegian kroner at a three$-$month fonward rate of $$0,20.$ Forward points are excluded in assessing the forward contract's effectiveness as a hedge, and are amortized to net income on a straight$-$line basis. At the end of three months, when the spot rate is $$0\mathrm{.}198$ per Norweglan krone, Derby orders and recelves the merchandlse, paying $670,000$kroner. The merchandise is sold within $30$ days.

Required:

a$-1.$ Prepare all Journal entries for Derby Corporation related to this transaction and hedge.

a$-2.$ What amount should Derby Corporation report in the current year's net income as cost of goods sold?

b$.$ What amount should Derby Corporation report in the current year's net income as forelgn exchange gain or loss?

Complete this question by entering your answers in the tabs below.

Req A$1$

Req $A2$

Req $B$

Prepare all journal entries for Derby Corporation related tof this transaction and hedge.

Note: If no entry is required for a transaction$/$event$,$ select $"$No Journal Entry Required" in the first account field.

Viaw transeastlen llest

View journal entry warkshest