Pacifico Company, a U$.$S$.-$based importer of beer aPacifico Company, a U$.$S$.-$based importer of beer and wine, purchased $1,100$cases of Oktoberfest$-$style beer from a German supplier for $231,000$euros$.$ Relevant U$.$S$.$dollar exchange rates for the euro are as follows:

Date: August $15$

Spot Rate: $$1\mathrm{.}05$

Forward Rate to October $15$: $$1\mathrm{.}11$

Call Option Premium for October $15($strike price $$1\mathrm{.}05)$: $$0\mathrm{.}05$

$$

Date: September $30$

Spot Rate: $$1\mathrm{.}10$

Forward Rate to October $15$: $$1\mathrm{.}14$

Call Option Premium for October $15($strike price $$1\mathrm{.}05)$: $$0\mathrm{.}06$

$$

Date: October $15$

Spot Rate: $$1\mathrm{.}13$

Forward Rate to October $15$: $$1\mathrm{.}13($spot$)$

Call Option Premium for October $15($strike price $$1\mathrm{.}05)$: N$/$A

Assume that, on August $15,$ the company forecasted the purchase of beer on October $15.$ On August $15,$ the company acquired a two$-$month call option on $231,000$ euros. The company designated the option as a cash value hedge of a forecasted foreign currency transaction. The time value of the option is excluded from the assessment of hedge effectiveness, and the change in time value is recognized in net income over the life of the option. Prepare journal entries to account for the foreign currency option and import purchase.

$8/15-$ Record the gain or loss on the foreign currency euro call option with a premium of $$0\mathrm{.}050$ per Euro at a strike price of $$1\mathrm{.}05$ and an exercise date of October $15.$

$9/30-$ Record the gain or loss on the foreign currency euro call option with a premium of $$0\mathrm{.}060.$

$9/30-$ Record the transfer of gain or loss to the cost of goods sold.

$10/15-$ Record the entry for changes in the fair value of Euro call option.

$10/15-$ Record the transfer of gain or loss to the cost of goods sold.

$10/15-$ Record purchase of foreign currency for settling the accounts payable.

$10/15-$ Record purchase of inventory from the German supplier.

$10/15-$ Record the transfer of inventory to cost of goods sold.

$10/15-$ Record the adjustment of cost of goods sold to the extent of Other Comprehensive Income.

Use the following accounts:

No Journal Entry Required

Accounts Payable $($euro$)$

Accounts Receivable $($euro$)$

Accumulated Other Comprehensive Income

Adjustment to Net Income

Cash

Cost of Goods Sold

Discount Expense

Equipment

Firm Commitment

Foreign Currency $($euro$)$

Foreign Currency Option

Foreign Exchange Gain or Loss

Forward Contract

Gain on Firm Commitment

Gain on Foreign Contract

Gain on Foreign Currency Option

Gain on Forward Contract

Interest Expense

Inventory

Loss on Firm Commitment

Loss on Foreign Contract

Loss on Foreign Currency Option

Loss on Forward Contract

Option Expense

Other Comprehensive Income

Sales