On October $1,2024,$ Eagle Company forecasts the purchase of inventory from a British supplier on February $1,2025,$ at a price of $100,000$ British pounds. On October $1,2024,$ Eagle pays $$1,800$ for a three$-$month call option on $100,000$ pounds with a strike price of $$2\mathrm{.}00$ per pound. The option is considered to be a cash flow hedge of a forecasted foreign currency transaction. On December $31,2024,$ the option has a fair value of $$1,600.$ The following spot exchange rates apply:

DateSpot RateOctober $1,2024$$ $2\mathrm{.}00$December $31,2024$$ $1\mathrm{.}97$February $1,2025$$ $2\mathrm{.}01$

What journal entry should Eagle prepare on October $1,2024?$

EventGeneral JournalDebitCreditA$)$Cash$1,800$Foreign Currency Option$1,800$B$)$Forward Contract$1,800$Cash$1,800$C$)$Foreign Currency Option$1,800$Foreign Exchange Gain or Loss$1,800$D$)$Foreign Exchange Gain or Loss$1,800$Cash$1,800$E$)$Foreign Currency Option$1,800$Cash$1,800$

Multiple Choice

Option E

Option A

Option D

Option B

Option C