Pacifico Company, a U$.$S$.-$based importer of beer and wine, purchased $1,000$ cases of Oktoberfest$-$style beer from a German supplier for $50,000$ Euros. Relevant U$.$S$.$ dollar exhange rates are as follows:Pacifico Company, a U$.$S$.-$based importer of beer and wine, purchased $1,000$ cases of Oktoberfest$-$style beer from a German supplier for

$50,000$ euros. Relevant U$.$S$.$ dollar exchange rates for the euro are as follows:

The company closes its books and prepares third$-$quarter financial statements on September $30.$

a$.$ Assume that the beer arrived on August $15,$ and the company made payment on October $15.$ There was no attempt to hedge $\frac{?}{\text{b}\text{a}\text{r}}($ Page $475)$

the exposure to foreign exchange risk. Prepare journal entries to account for this import purchase.

b$.$ Assume that the beer arrived on August $15,$ and the company made payment on October $15.$ On August $15,$ the company entered into

a two$-$month forward contract to purchase $50,000$ euros. The company designated the forward contract as a cash flow hedge of a

foreign currency payable. Forward points are excluded in assessing hedge effectiveness and amortized to net income using a straight$-$

line method on a monthly basis. Prepare journal entries to account for the import purchase and foreign currency forward contract.