Brandlin Company of Anaheim, California, sells parts to aforeign customer on December 1, 2015, with payment of 27,000korunas to be received on March 1, 2016. Brandlin enters into aforward contract on December 1, 2015, to sell 27,000 korunas onMarch 1, 2016. Relevant exchange rates for the koruna on variousdates are as follows:

Date	Spot Rate		Forward Rate (to March 1, 2016)
December 1, 2015	$	3.80	$	3.875
December 31, 2015		3.90		4.000
March 1, 2016		4.05		N/A

Brandlin’s incremental borrowing rate is 12 percent. The presentvalue factor for two months at an annual interest rate of 12percent (1 percent per month) is 0.9803. Brandlin must close itsbooks and prepare financial statements at December 31.

a-1.

Assuming that Brandlin designates the forward contract as a cashflow hedge of a foreign currency receivable and recognizes anypremium or discount using the straight-line method, prepare journalentries for these transactions in U.S. dollars.(If no entry is required for atransaction/event, select "No journal entry required" in the firstaccount field. Do not round intermediatecalculations. Round your final answers to 2 decimalplaces.)

     

a-2.	What is the impact on 2015 net income? (Do not roundintermediate calculations.)

    

a-3.	What is the impact on 2016 net income? (Do not roundintermediate calculations.)

        

a-4.	What is the impact on net income over the two accountingperiods? (Do not round intermediatecalculations.)

        

b-1.

Assuming that Brandlin designates the forward contract as a fairvalue hedge of a foreign currency receivable, prepare journalentries for these transactions in U.S. dollars.(If no entry is required for atransaction/event, select "No journal entry required" in the firstaccount field. Do not round intermediatecalculations. Round your final answers to 2 decimalplaces.)

       

b-2.	What is the impact on 2015 net income? (Do not roundintermediate calculations. Round your final answers to 2 decimalplaces.)

    

b-3.	What is the impact on 2016 net income? (Do not roundintermediate calculations. Round your final answers to 2 decimalplaces.)

      

b-4.	What is the impact on net income over the two accountingperiods? (Do not round intermediatecalculations.)