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Pacifico Company, a U.S.-based importer of beer and wine, purchased 2,000 cases of Oktoberfest-style beer...

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Accounting

Pacifico Company, a U.S.-based importer of beer and wine, purchased 2,000 cases of Oktoberfest-style beer from a German supplier for 620,000 euros. Relevant U.S. dollar exchange rates for the euro are as follows:
Date Spot Rate Forward Rate to October 15 Call Option Premium for October 15(strike price $1.55)
August 15 $ 1.55 $ 1.61 $ 0.05
September 301.601.640.06
October 151.631.63(spot) N/A
The company closes its books and prepares third-quarter financial statements on September 30.
Required:
Assume that the beer arrived on August 15, and the company made payment on October 15. There was no attempt to hedge the exposure to foreign exchange risk. Prepare journal entries to account for this import purchase.

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